Charles S. Chadwell v. Koch Refining Co. ( 2001 )

  •                      United States Court of Appeals
                               FOR THE EIGHTH CIRCUIT
                                       No. 00-2477
    Charles S. Chadwell,                    *
                  Appellant,                *
                                            * Appeal from the United States
             v.                             * District Court for the
                                            * District of Minnesota
    Koch Refining Company, LP,              *
                  Appellee.                 *
                                 Submitted: December 15, 2000
                                      Filed: May 17, 2001
    Before McMILLIAN and MURPHY, Circuit Judges, and BOGUE,1 District Judge.
    McMILLIAN, Circuit Judge.
         Charles Chadwell appeals from a final order entered in the United States District
    Court for the District of Minnesota, upon a jury verdict in favor of his former
    employer, Koch Refining Co., on Chadwell's claim of wrongful termination in violation
           The Honorable Andrew W. Bogue, United States District Judge for the District
    of South Dakota, sitting by designation.
            The Honorable James M. Rosenbaum, United States District Judge for the
    District of Minnesota.
    of the Minnesota Whistleblower Statute, Minn. Stat. § 181.932. Chadwell v. Koch
    Refining Co., No. 98-CV-761 (D. Minn. 2000) (order). For reversal, Chadwell argues
    that the district court abused its discretion in (1) excluding as hearsay evidence from
    a third party supporting his claim of pretextual termination, (2) instructing the jury that
    the Minnesota Whistleblower Statute requires intentional retaliation, and (3) denying
    his motion for a new trial on the ground that the jury's verdict was against the weight
    of the evidence. For the reasons discussed below, we affirm.
          Jurisdiction in the district court was proper based upon 28 U.S.C. §1441(a) and
    §1332(a). Jurisdiction on appeal is proper based upon 28 U.S.C. § 1291. The notice
    of appeal was timely filed pursuant to Fed. R. App. P. 4(a).
           The following facts are presented in the light most favorable to the jury's
    findings. Charles Chadwell began working for Koch Refining Co. ("Koch"), a
    petroleum refinery operator in Rosemount, Minnesota, in October 1977. In July 1995,
    he transferred to Koch's waste water treatment plant.
           In October 1996, Chadwell approached his supervisor and offered to retire early
    in exchange for $250,000. Koch refused Chadwell's offer. Not long thereafter,
    Chadwell began raising questions about Koch's environmental practices. In February
    1997, Chadwell and a co-worker, Terry Stormoen, collected evidence from the refinery
    allegedly to document environmental violations, including photos of the refinery and
    copies of Koch's logbooks and other paperwork. On April 4, 1997, Chadwell,
    accompanied by Stormoen and Bob Jacobson, a former Koch waste water treatment
    plant employee, contacted the Minnesota Pollution Control Agency ("MPCA")
    regarding Koch's environmental practices. Immediately after the meeting, Chadwell
    and Stormoen informed their supervisor that they had contacted the MPCA but would
    not reveal what they had told the agency. On April 11, 1997, Koch met with Chadwell
    and Stormoen to identify their concerns, but Chadwell refused to answer many of
    Koch's questions, claiming that he suffered from short-term memory loss stemming
    from past alcohol abuse. Koch informed Chadwell that his lack of cooperation might
    result in his termination. James "Tippy" Grotjohn, Chadwell's union steward, also
    attended the meeting and took notes.
          On April 21, 1997, a cigarette ash was found in the company truck Chadwell had
    driven on the previous shift. Koch policy forbids smoking in the refinery due to the
    explosion hazard, and Koch has fired employees for violating that rule. Chadwell
    admitted that he had smoked a cigarette while on shift that night, but not on refinery
           On April 22, 1997, Chadwell met with Larry Moorman, an investigator in Koch's
    legal department. Moorman questioned Chadwell about Chadwell's expressed concern
    that environmentally hazardous product spills had been improperly underreported at
    Koch. Chadwell did not offer any factual support for his concern, claiming again that
    he had short-term memory loss. Chadwell called in sick the next two days, asserting
    that he could not work due to work-related stress. Koch has a longstanding rule that
    any employee who misses two consecutive days of work due to a work-related ailment
    must see a doctor. For this reason, along with Chadwell's claims of short-term memory
    loss, Koch required Chadwell to see a doctor. Koch officials told Chadwell he would
    be placed on administrative leave with pay pending the company's investigation into the
    smoking issue, which was eventually dropped for lack of proof.
           Koch's company doctor referred Chadwell to a neurologist to evaluate the
    alleged memory loss, who in turn referred him to a psychologist, Dr. Jack Schaffer. Dr.
    Schaffer concluded that Chadwell did not have memory loss and could safely perform
    his job duties. Dr. Schaffer's report stated that Chadwell denied telling Koch that he
    had memory loss. After this meeting, Koch issued a written warning to Chadwell,
    reprimanding him for his inconsistent statements. Koch's human resources manager at
    the time believed that Chadwell was "playing games."
           On August 19, 1997, Chadwell was officially reprimanded for an incident in
    which a basin used to treat oily water overflowed, shooting foam 10 to 15 feet into the
    air, and Chadwell laughed at it rather than assisting to control or clean up the mess. On
    September 30, 1997, Chadwell had an outburst in which he told his supervisors that he
    was going to the newspapers and that Koch management would be going to jail for
    violating environmental regulations. Chadwell also told his supervisors that the plant
    manager had threatened to kill him and that Koch had placed a bomb in his mailbox.3
           On October 7, 1997, Chadwell met with Koch representatives and told them that
    he had taken home a suitcase full of Koch's documents that supported his allegations
    of Koch's environmental noncompliance, which he refused to return without a court
    order. Koch placed Chadwell on an indefinite suspension and sent Chadwell a letter
    on October 9 to inform him that his suspension would last until he returned the
    documents. Chadwell recorded in his diary (which he had begun keeping right before
    he reported Koch to the MPCA) that he had been suspended for an indefinite time and
    drew a smiley face next to the notation. On October 17, after consulting with his
    lawyer, Chadwell produced some of the documents. Chadwell returned to work on his
    next scheduled work day, October 24, and Koch warned him in writing that any "future
    failure to properly perform his job and/or comply with the Company's requests that [he]
    provide information . . . will be grounds for immediate discharge."
            Chadwell's perception of the death threat was based upon a statement the plant
    manager had made during a meeting about how the army handled people who did not
    cooperate, even though the plant manager also said that Koch handled things
    differently. Chadwell's perceived "bomb" in the mailbox was actually a soda bottle that
    exploded in Chadwell's neighbor's mailbox.
           On November 24, 1997, Chadwell confronted a supervisor, claiming that the
    plant manager had threatened to kill him, that Koch had "blown up" his mailbox, and
    that Koch was allowing hazardous waste to be transported within the refinery without
    proper company paperwork. Koch met with Chadwell on December 9, 1997, to
    discuss his claims and found no support for his allegation that his life had been
    threatened. Chadwell admitted that he had fabricated these statements because he
    wanted to get fired. At the end of the meeting, Chadwell was again suspended pending
    further investigation. Koch reviewed his file and decided to terminate Chadwell,
    informing him on December 17, 1997.
           On February 19, 1998, Chadwell sued Koch in state court under the Minnesota
    Whistleblower Statute, Minn. Stat. § 181.932,4 claiming that Koch fired him in
    retaliation for the report he made to the MPCA in April 1997 and for the reports he
    made directly to Koch regarding Koch's violations of environmental regulations.
    Chadwell announced the lawsuit at a press conference. Chadwell also suggested to a
    newspaper reporter that he would make the Koch documents available to the
    newspaper if Koch refused to settle the lawsuit. Koch removed the case to federal
    district court on the basis of diversity jurisdiction.
          At trial, beginning on January 3, 2000, Koch introduced evidence of secretly-
    recorded phone conversations in which Chadwell confided to friends and family that
              Minn. Stat. § 181.932 provides, in pertinent part:
          An employer shall not discharge, discipline, threaten, otherwise
          discriminate against, or penalize an employee regarding the employee's
          compensation, terms, conditions, location, or privileges of employment
          because: (a) the employee . . . in good faith, reports a violation or
          suspected violation of any federal or state law or rule adopted pursuant to
          law to an employer or to any governmental body or law enforcement
          official . . . .
    he was trying to get fired so he would be eligible for unemployment compensation.
    Chadwell attempted to introduce into evidence the notes taken by his union steward,
    Grotjohn, at the meetings with Koch, claiming that the notes corroborated his version
    of events. The district court excluded any statements made by Chadwell in the notes
    as inadmissible hearsay and cumulative under Fed. R. Evid. 403. However, the district
    court allowed Grotjohn to testify regarding statements made by Koch managers at these
    meetings as admissions by a party-opponent admissible under Fed. R. Evid. 801(d)(2).
           On January 19, 2000, the jury returned a verdict finding that Koch did not
    retaliate against Chadwell in violation of the Minnesota Whistleblower Statute.
    Chadwell filed a motion for a new trial, which was denied on April 20, 2000. This
    appeal followed.
    Exclusion of Hearsay Evidence
           We review the district court's evidentiary rulings for "clear and prejudicial abuse
    of discretion." EFCO Corp. v. Symons Corp., 
    219 F.3d 734
    , 739 (8th Cir. 2000).
    Chadwell argues that the district court abused its discretion by excluding Grotjohn's
    meeting notes as hearsay because (1) the notes were not offered to show the truth of
    the statements, but to demonstrate Chadwell's participation and cooperation with
    Koch; (2) the notes comprised the only evidence which showed that Koch's reason for
    Chadwell's termination was pretextual; (3) the notes from a third party were essential
    for the jury to resolve the conflicting testimony from both parties; and (4) the inability
    to present that evidence prevented him from proving his case. See Brief for Appellant
    at 20 (citing Estes v. Dick Smith Ford, Inc., 
    856 F.2d 1097
    , 1102-03 (8th Cir. 1988)
    (holding that the exclusion of an employer's prior discriminatory acts deprived the
    employee of a fair chance to prevail before a jury in a wrongful termination claim)).
    We disagree.
           The district court did not abuse its discretion in excluding Grotjohn's notes as
    double hearsay. The notes, which contained out-of-court statements regarding
    Chadwell's out-of-court statements offered to prove the truthfulness of Chadwell's
    assertion that he answered Koch's questions honestly and completely, clearly constitute
    hearsay evidence. See Fed. R. Evid. 801. Nor do the notes fall within any recognized
    exception to the hearsay rule. See United States v. Benson, 
    961 F.2d 707
    , 709 (8th Cir.
    1992) (Benson) (report of comments of witness constituting double hearsay deemed
    inadmissible under the Federal Rules of Evidence because it did not adequately fulfill
    the requirements of any hearsay exception). Hearsay evidence may not be admitted
    unless it falls into one of the recognized hearsay exceptions, regardless of how crucial
    it may be to proving the plaintiff's case. Fed. R. Evid. 802; Ohio v. Roberts, 
    448 U.S. 56
    , 66 (1980) (evidence not falling within a firmly-rooted hearsay exception must be
    excluded absent a showing of particularized guarantees of trustworthiness).
    Consequently, the district court properly admitted the notes only insofar as the content
    of the notes warranted a hearsay exception. In this case, Koch's statements made
    during its meetings with Chadwell were the only admissible portions of the notes
    because they qualified as admissions by a party-opponent under Fed. R. Evid.
           Chadwell alternatively argues that the district court abused its discretion by
    failing to admit the notes into evidence under the hearsay exception of Fed. R. Evid.
    803(6),5 which permits introduction of records of regularly conducted business activity.
              Fed. R. Evid. 803(6) provides:
          Records of Regularly Conducted Activity – A memorandum, report,
          record, or data compilation, in any form, of acts, events, conditions,
          opinions, or diagnoses, made at or near the time by, or from information
          transmitted by, a person with knowledge, if kept in the course of a
          regularly conducted business activity, and if it was the regular practice of
          that business activity to make the memorandum, report, record or data
    We again disagree.
           First, it is not clear that Grotjohn's note-taking, resulting from his duties as a
    union steward, qualifies as "regularly conducted business activity." Grotjohn was not
    acting as a Koch employee during the meetings, but rather as Chadwell's union
    representative. See, e.g., White Industries v. Cessna Aircraft Co., 
    611 F. Supp. 1049
    1060 (W.D. Mo. 1985) (requiring all parties to be acting under a business duty to the
    business activity in question in order to justify the 803(6) hearsay exception). His
    presence implies a protective function, making the notes more analogous to records
    kept in anticipation of a lawsuit, which do not qualify for the Rule 803(6) hearsay
    exception. See Sheerer v. Hardee's Food Systems, 
    92 F.3d 702
    , 706-07 (8th Cir. 1996)
    (holding that a report made in anticipation of litigation was not made in the ordinary
    course of business and therefore lacked reliability). In addition, the meetings occurred
    irregularly and for a specific purpose, casting doubt upon whether they can legitimately
    be classified as "kept in the course of a regularly conducted business activity." Fed. R.
    Evid. 803(6).
           Even if Grotjohn's notes do warrant the Rule 803(6) exception as records kept
    during the course of the regular business activity of a union steward, there is no
    evidence to indicate that the source of the information guarantees trustworthiness as
    required by Rule 803(6). Id. The meetings between Chadwell and Koch were not
    structured to ensure the parties' veracity. In fact, the content of the notes is
    untrustworthy because Chadwell himself, in his testimony at trial, made statements
    contrary to the statements reflected in the notes. See Medler v. Everest & Jennings,
    637 F.2d 1182
    , 1187 (8th Cir. 1981) (rejecting evidence offered under the Rule 803(6)
    hearsay exception because other evidence indicated that the information was not
          compilation . . . unless the source of information or the method or
          circumstances of preparation indicate lack of trustworthiness.
           Ultimately, though, the 803(6) hearsay exception is unnecessary because
    Chadwell, the original source of the statements at issue, testified at trial. The purpose
    of Rule 803(6) is to admit hearsay evidence, as long as it possesses sufficient
    trustworthiness, which "justif[ies] nonproduction of the declarant at trial even though
    he may be unavailable." Advisory Committee Note to Rule 803. In the present case,
    Chadwell not only was available to, but did, testify at trial. As a result, the district
    court properly concluded that the admission of the notes regarding Chadwell's
    statements would have been "needless presentation of cumulative evidence." Fed. R.
    Evid. 403. Chadwell corroborated Koch's version of events by testifying at trial that:
    (1) he had not provided Koch with complete information regarding the alleged
    environmental violations, (2) he had claimed to suffer from short term memory loss in
    the meetings, and (3) he had refused to provide Koch with access to its company
    documents in his possession without a court order. See Benson, 961 F.2d at 709
    (finding no evidentiary error when the information was corroborated by other
    evidence). Chadwell's contrary statements in the notes would not have outweighed this
    direct testimony. Consequently, the jury had sufficient evidence to resolve the
    conflicting testimony presented at trial and the notes would have been cumulative
          We therefore hold that the district court did not abuse its discretion in excluding
    Grotjohn's notes of Chadwell's statements as hearsay and as cumulative evidence.
    Jury Instructions
           We review jury instructions for clear prejudice, to determine whether the
    instruction fairly and adequately states the applicable law when reading the instructions
    as a whole. See Cross v. Cleaver, 
    142 F.3d 1059
    , 1067 (8th Cir. 1998). In Minnesota,
    a claim of retaliatory discharge in violation of the Minnesota Whistleblower Statute
    requires application of the McDonnell Douglas burden-shifting analysis. McDonnell
    Douglas Corp. v. Green, 
    411 U.S. 792
     (1973); Rosen v. Transx Ltd., 
    816 F. Supp. 1364
    , 1369-70 (D. Minn. 1993) (Rosen) (utilizing the McDonnell Douglas burden-
    shifting analysis in a Minnesota Whistleblower Statute retaliatory discharge claim).
    Under that framework, Chadwell first needed to establish a prima facie case that his
    termination was motivated by discrimination resulting from actions protected under the
    Minnesota Whistleblower Statute. He satisfied this burden by proving that he
    contacted the MPCA and was subsequently fired. Then the burden shifted to Koch to
    articulate a non-discriminatory reason for the discharge. Koch satisfied its burden by
    presenting evidence of Chadwell's misconduct, including his refusal to assist Koch in
    the environmental investigation, his claims of memory loss, his outbursts at work, and
    his intent to get fired to collect unemployment compensation. The district court
    properly instructed the jury regarding this burden-shifting in Jury Instructions Nos. 10
    & 11, and Chadwell does not contend otherwise. At that point, the burden shifted back
    to Chadwell to show, by a preponderance of the evidence, that Koch's legitimate reason
    for the discharge was merely a pretext for retaliation. See Rosen, 816 F. Supp. at 1370.
    We must consider whether this burden was adequately and fairly represented in the
    jury's instruction.
          The instruction at issue stated:
          If you find that Koch has shown a legitimate reason for the adverse
          employment action, the ultimate burden of proof and persuasion is on Mr.
          Chadwell to show that the offered reason is a pretext for intentional
          retaliation, and that adverse employment action was motivated by his
          engaging in protected conduct. A reason is a pretext if it is not the true
          reason, but is instead given to hide the actual, retaliatory motivation.
          Your inquiry in this area is limited as to whether Koch's offered
          nonretaliatory reason for the adverse employment action is in fact the
          reason for its behavior, not whether the reason was poor, unwise, or
          You may find that Koch had more than one reason for actions taken
          agasint Mr. Chadwell, some permissible and some not permissible. If you
          find that at least one reason was impermissible, as discussed above, and
          it motivated the adverse employment action against Mr. Chadwell, you
          should find in favor of Mr. Chadwell.
    Jury Instruction No. 12.
            Chadwell argues that the district court improperly stated the applicable law
    because it required Chadwell to prove that Koch's retaliatory conduct constituted
    "intentional retaliation" when the Minnesota Whistleblower Statute does not contain
    an "intentional retaliation" requirement. Chadwell claims that the district court
    incorrectly applied the McDonnell Douglas burden-shifting analysis, and failed to
    actually shift the burden to Koch to articulate a legitimate and nonretaliatory reason for
    Chadwell's discharge once Chadwell had established his prima facie case, but instead
    improperly required Chadwell to prove an additional burden of "intentional retaliation."
    Chadwell proposed that the jury instructions, in order to accurately state Minnesota
    law, should have enabled him to prevail "if an illegitimate reason 'more likely than not'
    motivated the discharge decision." McGrath v. TCF Bank Savings, 
    509 N.W.2d 365
    366 (Minn. 1993) (requiring jury instructions to reflect the applicable law by allowing
    a plaintiff to prevail, despite other legitimate reasons for the discharge, "if an
    illegitimate reason 'more likely than not' motivated the discharge decision"). We
    disagree, and hold that the district court properly instructed the jury of its obligation
    consistent with the applicable Minnesota law.
            The district court possesses broad discretion to formulate the language of jury
    instructions, Porous Media Corp. v. Midland Brake, Inc., 
    220 F.3d 954
    , 959 (8th Cir.
    2000), and the instructions in the present case were accurate and fair to both parties.
    It is well settled that the Minnesota Whistleblower Statute requires proof of intentional
    retaliation. See Kunferman v. Ford Motor Co., 
    112 F.3d 962
    , 965 (8th Cir. 1997)
    (defining the causation requirement of a retaliatory discharge claim as based upon
    knowledge and intent); Rosen, 816 F. Supp. at 1369-70 (classifying pretextual
    retaliatory discharge under the Minnesota Whistleblower Statute as premised upon
    "intentional retaliation"); Larson v. New Richland Care Center, 
    538 N.W.2d 915
    , 920
    (Minn. Ct. App. 1995) (construing the Minnesota Whistleblower Statute as an
    intentional tort created by statute, requiring an employee to "prove that the employer
    intentionally discharged or retaliated against" him or her). We conclude that the district
    court fairly and accurately stated the elements of a valid retaliation claim under
    Minnesota law, which understands retaliation as an inherently intentional concept and
    requires a showing of intentional actions causing the retaliation. See Reeves v.
    Sanderson Plumbing Prods., Inc., 
    120 S. Ct. 2097
    , 2106 (2000) (articulating the
    ultimate question in a retaliatory discharge claim as "whether the employer intentionally
    discriminated," regardless of the implausibility or unpersuasiveness of the employer's
    proffered reason for discharge) (citing St. Mary's Honor Center v. Hicks, 
    509 U.S. 502
    511 (1993)).
          As a result, we hold that the district court did not abuse its discretion in
    formulating the jury instructions, which fairly and accurately stated Minnesota law.
    Sufficiency of the Evidence
           Denial of a motion for new trial is "'virtually unassailable' when the verdict is
    claimed to be against the weight of the evidence," Peerless Corp. v. United States, 
    185 F.3d 922
    , 927 (8th Cir. 1999), because the district court is closer to the evidence and
    better equipped to make fact and credibility determinations. We will reverse the
    district court only if there is an "absolute absence of evidence to support the jury's
    verdict." Id. Chadwell argues that the district court abused its discretion in denying
    his motion for a new trial because the jury's verdict was against the greater weight of
    the evidence. Chadwell claims that he presented overwhelming evidence to prove that
    he was terminated as a direct result of his report to the MPCA, an activity protected by
    the Minnesota Whistleblower Statute. Consequently, Chadwell characterizes the
    verdict as a miscarriage of justice warranting a new trial. We disagree.
          Koch presented ample evidence at trial to substantiate the jury's findings that
    Chadwell's misconduct motivated Koch's termination decision. The record includes
    evidence regarding Chadwell's attempts to get fired, his claims of memory loss, and his
    refusal to aid in Koch's investigation. It was reasonable for a jury to conclude that
    Chadwell's termination was justified as a result of his aberrant work behavior, despite
    his report to the MPCA, because whistleblowers are not insulated from company rules
    in the workplace. Kiel v. Select Artificials, Inc., 
    169 F.3d 1131
    , 1136 (8th Cir. 1999)
    (en banc). Such factual determinations are best left to the jury, and we hold that the
    district court correctly determined that sufficient evidence supported the jury's verdict.
           We therefore hold that the district court did not abuse its discretion in denying
    Chadwell's motion for a new trial on the ground that the verdict was against the weight
    of the evidence.
          Accordingly, the district court order is AFFIRMED.
          A true copy.