holding that an “employee cannot be said to have ‘blown the whistle’” under Minnesota’s whistleblower statute “when the employee’s report is made because it is the employee’s job to investigate and report wrongdoing”
How later courts described this case
- holding that an “employee cannot be said to have ‘blown the whistle’” under Minnesota’s whistleblower statute “when the employee’s report is made because it is the employee’s job to investigate and report wrongdoing”
- stating that when a company’s in-house counsel advises the company on compliance issues, “the lawyer is not sending a report for the purpose of exposing an illegality and the lawyer is not blowing the whistle”
- construing Minnesota Whistleblower Act to afford no protection to email report sent as part of employee’s normal job duties as an in-house counsel
- relying on federal cases construing the Whistleblower Protection Act when interpreting retaliation claim under MWA
Written by the judges who cited it.
The opinion
MAGNUSON, Chief Justice
(concurring).
I concur in the result reached in the opinion authored by Justice Gildea that Kidwell cannot recover in this case, but do *232 so on different grounds. In my opinion, Kidwell’s breach of fiduciary duty bars his claim.
Whether and to what extent lawyers, particularly in-house lawyers, may pursue retaliatory discharge claims is a topic that has generated significant case law and scholarly discussion. See, e.g., Alex B. Long, Retaliatory Discharge and the Ethical Rules Governing Attorneys, 79 U. Colo. L. Rev. 1043 , 1050 nn. 38-44 (2008) (collecting cases); Kim T. Vu, Conscripting Attorneys To Battle Corporate Fraud Without Shields or Armor? Reconsidering Retaliatory Discharge in Light of Sarbanes-Oxley, 105 Mich. L. Rev. 209 , 215-18 (2006) (discussing the varying approaches that courts in different jurisdictions have taken to retaliatory discharge claims brought by attorneys). In the nearly 20 years since the Illinois Supreme Court held in Balla v. Gambro, Inc., 145 Ill.2d 492 , 164 Ill.Dec. 892 , 584 N.E.2d 104, 110 (1991), that in-house lawyers may not pursue whistleblower claims, courts across the country have grappled with the issue. A majority of those decisions and most of the legal commentary support whistleblower status for attorneys, but that view is not uniform. Compare Long, supra, at 1080-99 (supporting a broad right to attorney whistleblower claims), and Vu, supra, at 215 (advocating the use of Sarbanes-Oxley as a vehicle for attorneys to bring wrongful discharge claims), with John R. Webb & J. Chris Kinsman, Wrongful Discharge Suits by Lv-House Counsel: Refining the General Dynamics Standard, 11 Lab. Law. 35 , 36 (1995) (explaining the authors’ view that “wrongful discharge claims by in-house counsel have negative consequences for the legal profession and the public”).
Lawyers have special fiduciary obligations to their clients, and in-house lawyers have responsibilities to their employers that employees in other fields do not. In considering the applicability of the whistleblower statute to lawyers, we must keep those special obligations in mind. Sound public policy principles underlie the whistleblower statute, but those public policy principles do not trump the public policy behind the fiduciary obligations that lawyers owe to clients.
Justice Cardozo said that “[mjembership in the bar is a privilege burdened with conditions.” In re Rouss, 221 N.Y. 81 , 116 N.E. 782, 783 (N.Y.1917). Lawyers have obligations to counsel their clients and to keep confidences. Minn. R. Prof. Conduct 1.2,1.6. The client has the right to decline to follow the lawyer’s legal advice, no matter how strongly the lawyer feels about the advice. See Minn. R. Prof. Conduct 1.2. A lawyer who disagrees with his or her client’s conduct can withdraw from representation, but cannot force the client to act consistently with the lawyer’s advice. Minn. R. Prof. Conduct 1.16. Nor in most situations may the lawyer disclose the client’s confidences after the client chooses to proceed with the conduct that the lawyer has discouraged. See Minn. R. Prof. Conduct 1.6.
The Rules of Professional Conduct recognize only a few narrow circumstances in which lawyers can act beyond the limits imposed by the relationship of trust and confidence. The Rules permit disclosure of confidences only to prevent commission of a crime or to prevent death or substantial bodily harm to a third party, or to prevent purely economic harm if the lawyer’s services have been used to effect that harm. See id. The only other narrow exception allows the lawyer to disclose a client’s confidences and secrets to defend against a claim by the client or establish a claim against the client. Id. The American Bar Association Committee on Ethics and Professional Responsibility has expressed its opinion that a lawyer may disclose con *233 fidences in order to establish a whistle-blower claim against a former client. But even in a whistleblower case, a lawyer does not have complete freedom to reveal client confidences and secrets:
The Model Rules do not prevent an in-house lawyer from pursuing a suit for retaliatory discharge when a lawyer was discharged for complying with her ethical obligations. An in-house lawyer pursuing a wrongful discharge claim must comply with her duty of confidentiality to her former client and may reveal information to the extent necessary to establish her claim against her employer. The lawyer must take reasonable affirmative steps, however, to avoid unnecessary disclosure and limit the information revealed.
ABA Comm. on Ethics and Prof'l Responsibility, Formal Op. 01-424 (2001) (emphasis added).
Minnesota Statutes § 181.932 (2008) contains no exception that excludes lawyers from the class of employees who may seek the statute’s protection. But the statute does not trump our power and responsibility to regulate the bar, particularly in matters of ethics. Our exclusive duty to protect the rights of clients through regulation of the practice of law requires us to consider factors beyond the language of the statute in this case. Cf. Irwin v. Surdyk’s Liquor, 599 N.W.2d 132, 140 (Minn.1999) (explaining that this court, and not the legislature, has exclusive regulatory authority over the attorney-client relationship). See generally Minneapolis Star and Tribune Co. v. Hous. and Redevelopment Auth., 246 N.W.2d 448, 452 (Minn.1976) (“[The] long-accepted theory protecting the attorney-client relationship is as basic to our legal system as the right of the judiciary to regulate and oversee the administration of that legal system.”).
A lawyer may bring a whistleblower claim, but he or she is not thereby relieved of the fiduciary obligations imposed by the Rules of Professional Conduct, either before or after the claim is brought. Any disclosures of client confidences must be within the strict confines of the Rules of Professional Conduct. I would therefore hold that when a lawyer breaches his or her fiduciary duty to the client, the client has an absolute right to terminate the attorney-client relationship. And that right cannot be burdened by any claim from the lawyer for compensation or other damages. See Lawler v. Dunn, 145 Minn. 281, 284 , 176 N.W. 989, 990 (1920) (“[Because] the client has the right to terminate the relation of attorney and client at any time[,] ... it follows as a natural consequence that [the client] cannot be compelled to pay damages for exercising that right .... ”); cf. Perl v. St. Paul Fire and Marine Ins. Co., 345 N.W.2d 209, 212 (Minn.1984) (“The law treats a client’s right to an attorney’s loyalty as a kind of ‘absolute’ right in the sense that if the attorney breaches his or her fiduciary duty to the client, the client is deemed injured even if no actual loss results.”); Rice v. Perl, 320 N.W.2d 407, 411 (Minn.1982) (holding that an attorney who breaches a fiduciary duty to a client forfeits his right to compensation without any requirement that the client prove actual harm). But see Gilchrist v. Perl, 387 N.W.2d 412, 417 (Minn.1986) (authorizing only partial forfeiture of previously earned fees when there is no bad faith involved, no actual harm to the client and “particularly where there are multiple potential plaintiffs”). In the context of this case, I would hold that Kidwell’s breach of his fiduciary duty forfeited any right he might have to recover damages or fees and costs under the statute.
The district court correctly found as a matter of law that Kidwell had breached *234 his fiduciary duty to the client by disclosing client confidences outside of the authorization of Minn. R. Prof. Conduct 1.6(b)(8). Nonetheless, the district court refused to rule that the breach barred Kidwell’s whistleblower claim. It submitted to the jury a question concerning the damages, if any, that Sybaritic suffered as a result of Kidwell’s breach. But when a lawyer breaches a fiduciary duty to the client, the question of whether the client is actually damaged or not is irrelevant to the continuation of the relationship because “the client is deemed injured even if no actual loss results.” Perl, 345 N.W.2d at 212 . The resolution I would reach protects the fiduciary obligations a client is owed by an attorney even when the client cannot prove a monetary loss as a result of that breach.
A contrary holding, allowing a lawyer’s whistleblower claim to trump the lawyer’s fiduciary obligations to the client, would amount to what one commentator has called “a further slide down the slippery slope on which our profession has been riding — away from the ideals of zealous client representation, based upon the bedrock principle of clients’ absolute confidence in their attorneys’ duty of confidentiality.” C. Evan Stewart, In-House Counsel as Whistleblower: A Rat Without a Remedy % 240 N.Y. L.J. 24 , (col. 3) (Aug. 21, 2008) (arguing that in-house lawyers should only be able to maintain whistle-blower claims subject to compliance with ethical obligations to their clients). Because Kidwell breached his fiduciary obligations to his client, in my opinion he forfeited his right to recovery.