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

United States Court of Appeals
FOR THE EIGHTH CIRCUIT
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No. 00-2477
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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
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Before McMILLIAN and MURPHY, Circuit Judges, and BOGUE,1 District Judge.
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McMILLIAN, Circuit Judge.
Charles Chadwell appeals from a final order entered in the United States District
2
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
1
The Honorable Andrew W. Bogue, United States District Judge for the District
of South Dakota, sitting by designation.
2
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
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).
Background
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
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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
property.
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
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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."
3
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.
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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
4
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 . . . .
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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.
Discussion
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.
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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.
801(d)(2).
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.
5
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
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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
trustworthy).
compilation . . . unless the source of information or the method or
circumstances of preparation indicate lack of trustworthiness.
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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
evidence.
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-
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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
erroneous.
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
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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
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(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
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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.
Attest:
CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.
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