author: JOHNSON, Judge. LANSING, Judge

text:
    Brian F. KIDWELL, Respondent, v. SYBARITIC, INC., Appellant.
    Nos. A07-0584, A07-0788.
    Court of Appeals of Minnesota.
    June 3, 2008.

      James H. Kaster, Sofia B. Andersson, Nichols, Kaster & Anderson, P.L.L.P., Minneapolis, MN, for respondent.
    Katherine A. McBride, James R. Roegge, Bradley J. Lindeman, Erica G. Strohl, Meagher & Geer, P.L.L.P., Minneapolis, MN, for appellant.
    Considered and decided by JOHNSON, Presiding Judge; LANSING, Judge; and COLLINS, Judge.

       Retired judge of the district court, serving as judge of the Minnesota Court of Appeals by appointment pursuant to Mimi. Const, art. VI, § 10.

   OPINION

JOHNSON, Judge.

Brian F. Kidwell was the general counsel of Sybaritic, Inc., for approximately ten months. The company terminated his employment three weeks after he sent an e-mail message to Sybaritic’s top management expressing his concerns about certain activities of the company that he asserted were unlawful. After his termination, Kidwell sued Sybaritic under the Minnesota Whistleblower Act. A Hennepin County jury found in his favor and awarded him damages. Following the verdict, Sybaritic moved for judgment as a matter of law, and the district court denied the motion.

Sybaritic’s appeal presents questions concerning whether and under what circumstances an attorney who was discharged from employment as an in-house attorney may pursue a claim against his former employer under the Minnesota Whistleblower Act. Sybaritic first urges us to hold that an in-house attorney never may sue his or her former employer under the whistleblower act. We reject that argument and conclude that there is no per se bar to a lawsuit under the whistleblower act by an in-house attorney. Sybaritic also argues that Kidwell’s communications with Sybaritic’s management were not the type of communication that can be the basis of an action under the whistleblower act. We find merit in Sybaritic’s second argument and conclude that Kidwell did not make a good-faith report of a violation of law because the alleged report concerned subject matters that were squarely within his duties as general counsel. Thus, we reverse the district court’s denial of Sybaritic’s post-trial motion for judgment as a matter of law.

FACTS

A. Background

Brian F. Kidwell is an attorney who was admitted to the Minnesota Bar in 1983. He has work experience in private practice at three Minnesota law firms and had a brief tenure at an insurance company. Sybaritic, Inc., is a Minnesota company that manufactures and sells products associated with the spa business, such as dermabrasion systems and skin-care treatments. In July 2004, Sybaritic hired Kidwell to be its general counsel.

During his tenure as general counsel of Sybaritic, Kidwell served as legal advisor to the company with respect to, among other issues, four business practices that he believed raised legal issues and required corrective action. First, soon after Kidwell started at Sybaritic, the owner of the company, Steve Daffer, asked Kidwell to investigate whether some members of the company’s sales force were receiving kickbacks from a company that did business with Sybaritic. Kidwell investigated and found that three sales people were, in fact, receiving kickbacks. In late 2004 or early 2005, Kidwell informed Daffer of the results of the investigation. Daffer placed the employees on probation and required them to return the money they had received.

Second, in late 2004, Kidwell became concerned that Sybaritic’s medical director was engaging in the unauthorized practice of medicine. The medical director was licensed to practice medicine in a foreign country but not in Minnesota or any other state. Yet Sybaritic’s website referred to the medical director as a physician, and the medical director was engaged in tests on human subjects using machines sold by Sybaritic. The medical director also wrote weekly articles that, in Kidwell’s opinion, could be construed as medical advice. In October 2004 and January 2005, Kidwell expressed his concerns in memo-randa addressed to Sybaritic’s management, and he later met with Sybaritic’s chief operating officer to discuss the issue. The company agreed to implement Kid-well’s recommendations. The weekly articles stopped immediately, although Kid-well did not inquire further as to whether Sybaritic followed all his recommendations.

Third, Kidwell learned that Sybaritic may have been required to pay California sales tax on items sold and shipped from its Minnesota office because it maintained a California branch office. Kidwell was asked to prepare documents to make the California branch office a limited liability company called Sybaritic West LLC, which would be a subsidiary of Sybaritic. In early 2005, Kidwell noticed that Sybaritic’s website continued to list Sybaritic West as a “branch office.” Kidwell raised the issue again and was told that the website would be changed. Kidwell did not investigate further to determine whether the change was made.

Fourth, and most significant for purposes of Kidwell’s claim, Sybaritic filed a lawsuit in federal court against an Estonian company named NeoQi, alleging breach of contract and theft of trade secrets. Kidwell’s responsibilities included oversight of this litigation. In addition, to minimize attorney fees, Daffer asked Kid-well, in lieu of Sybaritic’s outside litigation counsel, to take depositions in Estonia in April 2005. As he was preparing for the depositions, Kidwell became aware of emails that, in his opinion, substantially weakened the merits of Sybaritic’s claims against NeoQi. Sybaritic had not produced the e-mails to NeoQi, which had not yet requested them, but discovery deadlines were looming. Before leaving for Estonia, Kidwell talked to Daffer about the content of the e-mails. Daffer asked Kidwell why Sybaritic should be concerned in light of the fact that the e-mails had not been requested by or produced to NeoQi and, thus, were unlikely to be admitted into evidence. Kidwell, however, advised Daffer to take the e-mails into account and to consider settling the case.

Kidwell testified that, before leaving for Estonia, he asked Sybaritic’s information-technology manager, Brandon Carlson, to put copies of the e-mails on a disk for Thomas C. Atmore, Sybaritic’s outside litigation counsel. Carlson, however, testified that it was Daffer who made the request. Regardless, Carlson gave a disk containing the e-mails to Atmore. While Kidwell was in Estonia, Daffer perceived a problem with his computer and became concerned that there was a virus in Sybaritic’s computer system. He also was concerned that the virus might have infected the disk that had been given to Atmore. Daffer instructed Carlson to retrieve the disk from Atmore and to give Atmore another disk that would be free of viruses. Atmore told Carlson that the exchange was unnecessary because his firm had anti-virus software, but Carlson insisted on Atmore’s return of the disk. The company ultimately determined that there was no computer virus, and Atmore testified that, as far as he could determine, no e-mails were missing from the second disk.

After Atmore returned the first disk, and while Kidwell was in Estonia, the two men spoke by telephone, and Atmore expressed concern about the request that he return the disk. Atmore reminded Kid-well of Sybaritic’s duty to preserve the emails. Atmore suggested that he write a letter to Daffer to warn him about the duty to preserve evidence. Kidwell asked Atmore to send the letter to him instead, which Atmore did. Additionally, Kidwell spoke with Jeff Nelson, Daffer’s administrative assistant, about his and Atmore’s concerns that Daffer might be altering, destroying, or concealing evidence. Nelson conveyed Kidwell’s concerns to Carlson, and Carlson spoke to Daffer, who assured Carlson that no one was tampering with evidence.

B. Kidwell’s Termination

Kidwell returned from Estonia on Friday, April 22, 2005. That Sunday, Kidwell went to his office but discovered that the door was locked. He did not have a key. That evening, while at home, Kidwell composed and sent a long e-mail message to four members of Sybaritic’s senior management. The subject line reads, “A Difficult Duty.” The first three paragraphs of the e-mail are as follows:

Gentlemen,
I write to you all with deep regret, but I cannot fail to write this e-mail without also failing to do my duty to the company and to my profession as an attorney. That I will not do.
I have for many months seen evidence that Sybaritic is infected with a pervasive culture of dishonesty. In this culture lies by our salesforce are rewarded with bonuses and promotions while accusations by customers of dishonesty by salespeople known to be liars are ignored. In this culture a man who is without any known qualifications is allowed to mascquerade [sic] as a medical doctor and efforts to confirm his credentials and curb his unauthorized practice of medicine are ignored. In this culture we deny any obligation to collect or pay California sales tax based on a claim that we do not do business in California and then advertise the opening of a San Francisco “branch office” on our website. In this “sales-driven” company, the ends justify the means.
As distasteful as this culture of dishonesty is to me, to my shame I have until now convinced myself that I did not need to object because the dishonesty was outside of my area of responsibility or control. That has now changed, and I must inform you of this fact and of my intended course of action.

Kidwell then detailed his concerns regarding the NeoQi e-mails, explaining that Sybaritic could be held liable for sanctions under rules 11 and 37(b) of the Federal Rules of Civil Procedure and held criminally liable under sections 401, 1509, and 1512 of title 18 of the United States Code. Kidwell concluded the e-mail with his intended course of action:

It is my firm conviction that Sybaritic intends to continue to engage in tax evasion, the unauthorized practice of medicine and obstruction of justice. Accordingly, it is my intention to advise the appropriate authorities of these facts. I do this with no ill-will. To the contrary, I wish that I was not obliged to do so. However, the demand of Sybaritic that I become attorney of record in the NeoQi case has made it impossible to ignore the obstruction of justice issue, and compels me to speak out about the tax evasion and unauthorized practice of medicine issues which the company has refused to address. I regret that I see no other course of action available.

Kidwell also sent a blind copy of the e-mail to Atmore, and he later forwarded the email to his father, who was not a Sybaritic employee. Kidwell testified at trial that he conducted legal research concerning the Minnesota Whistleblower Act from his home computer before sending the e-mail.

On the morning of Monday, April 25, 2005, members of Sybaritic’s management team met by themselves and with Kidwell to discuss the contents of the e-mail. Before the end of the day, supervision of Kidwell was transferred from Daffer to Steve Chesley, another member of the management team. Three weeks later, on May 16, 2005, Chesley informed Kidwell that his employment was being terminated because he obviously was not happy with the job and because Daffer was not happy with Kidwell. Sybaritic’s reasons for the termination did not remain consistent over time. During pre-trial discovery, Sybaritic stated that Kidwell’s employment was terminated because of his failure to complete assignments, because of his “request for one week vacation on less than one week’s notice,” which “coincided with previously scheduled depositions to occur in a pending arbitration involving Sybaritic, Inc.,” and because “Sybaritic, Inc. was not confident nor trusted that Kidwell was able to complete his duties as General Counsel in a satisfactory manner.” At trial, Sybaritic contended that Kidwell’s employment was terminated for performance reasons and because he breached his fiduciary duty by forwarding a copy of the difficult-duty email to his father.

C. Procedural History of Lawsuit

After his termination, Kidwell commenced this lawsuit, alleging he was terminated in violation of the Minnesota Whis-tleblower Act. Sybaritic counterclaimed for breach of fiduciary duty based on Kidwell’s forwarding the difficult-duty e-mail to his father. Both parties moved for summary judgment, which the district court denied. Kidwell also moved for leave to amend his complaint to allege punitive damages, which the district court denied.

The case was tried to a Hennepin County jury for seven days in September and October of 2006. The district court gave the following instruction to the jury concerning what type of conduct is protected activity under the whistleblower act:

Protected activity is an employee’s conduct in making a good faith report of an actual or suspected violation of a state or federal law to an employer or to any governmental body or law enforcement official.
An employee engages in a protected activity under the act if the purpose of the employee’s report to the employer or an outside governmental agency was to blow the whistle for the purpose of exposing an illegality that is a violation of a federal, state or local law.
In order to establish that he made a protected report for purpose of the Minnesota Whistleblower Act, Brian Kidwell is required to allege facts that if proven constitute a current violation of law.
An employee does not engage in protected activity unless he made a report in good faith. To determine whether a report was made in good faith, you must look not only at the content of the report, but also at Mr. Kidwell’s job and purpose in making the report at the time the report was • made, not after subsequent events have transpired.

(Emphasis added.) The district court rejected one of Sybaritic’s proposed jury instructions that read: “An employee does not engage in a protective activity if it was the employee’s job to bring to the employer’s attention or the attention of any governmental agency any activities that the employee in good-faith believed were in violation of any federal, state or local law.” In lieu of this proposed instruction, but in an attempt to address the same issue, the district court inserted the words “job and” at the point where those words are italicized above. The district court also rejected an instruction proposed by Sybaritic that read: “An employee does not engage in a protective activity if he reports alleged violations of law that were already known by the employer.”

The jury completed a special verdict form by finding that Kidwell had engaged in conduct protected by the whistleblower act, that he had done so in good faith, and that his conduct was a substantial motivating factor in Sybaritic’s termination decision. The jury awarded Kidwell $65,000 in back pay, $120,000 in front pay, and $12,000 for emotional distress. The district court instructed the jury that Kidwell had breached his fiduciary duty, but the jury found that Sybaritic had suffered no damages as a result of the breach.

Sybaritic brought a post-trial motion for judgment as a matter of law or, in the alternative, a new trial, which the district court denied. The district court filed findings of fact and conclusions of law and ordered judgment in Kidwell’s favor in the amount of $197,000. The district court also awarded Kidwell attorney fees of approximately $138,000 and costs and expenses of approximately $10,000.

Sybaritic appeals, making five arguments: (1) Kidwell’s whistleblower claim is barred because he is an attorney suing his former client; (2) the evidence is insufficient to prove a whistleblower claim because Kidwell did not engage in conduct protected by the act; (3) Kidwell is required to disgorge some or all of the damages awarded to him because of his breach of fiduciary duty; (4) the district court’s jury instructions were erroneous; and (5) the district court erroneously admitted various types of inadmissible evidence. Kidwell filed a notice of review to address one issue, the denial of his motion to amend his complaint to seek punitive damages.

ISSUES

I. May a person who was discharged from employment as an in-house attorney maintain an action against his former employer under the Minnesota Whistleblower Act?

II. Did Kidwell, an attorney employed by Sybaritic as its general counsel, present evidence sufficient to prove that he in good faith reported a violation or suspected violation of law, as required by the Minnesota Whistleblower Act?

ANALYSIS

Sybaritic appeals from the district court’s denial of its post-trial motion for judgment as a matter of law pursuant to rule 50.02 of the Minnesota Rules of Civil Procedure. Judgment as a matter of law is appropriate when a jury’s verdict has no reasonable support in fact or is contrary to law. Diesen v. Hessburg, 455 N.W.2d 446, 452 (Minn.1990). The denial of a motion for judgment as a matter of law presents a legal question, which is subject to de novo review. Gilbertson v. Leininger, 599 N.W.2d 127, 130 (Minn.1999).

I.

Sybaritic first argues that Kidwell’s whistleblower claim is barred as a matter of law on the ground that an in-house attorney never may bring such a claim against a former employer. Sybaritic’s argument is based on the traditional rule that a client may discontinue an attorney-client relationship at any time, with or without cause, and without penalty, see Lawler v. Dunn, 145 Minn. 281, 283, 176 N.W. 989, 989 (1920), and on the premise that a lawsuit by an attorney against a former client would be inherently inconsistent with an attorney’s duty to not reveal client confidences, see Minn. R. Prof. Conduct 1.6. In some jurisdictions, this doctrine is known as “the attorney-client defense.” See, e.g., Balla v. Gambro, Inc., 145 Ill.2d 492, 164 Ill.Dec. 892, 584 N.E.2d 104, 108 (1991) (holding that former in-house attorney’s common-law tort claim of retaliatory discharge was barred); Amman v. Arthur Andersen, LLP, 348 Ill.App.3d 781, 284 Ill.Dec. 776, 810 N.E.2d 566, 570-72 (2004) (applying Balia).

The parties’ legal arguments focus on two Minnesota cases in which this issue was discussed. The first is Nordling v. Northern States Power Co., 478 N.W.2d 498 (Minn.1991), in which the supreme court considered a lawsuit brought by a former in-house attorney whose employment had been terminated. Id. at 499-500. The plaintiff brought claims based on contract and tort theories and on the whis-tleblower act, and the district court granted summary judgment on all claims. After extensive discussion of the nature of the attorney-client relationship, the supreme court held that “in-house counsel should not be precluded from maintaining an action for breach of a contractual provision in an employee handbook, provided, however, that the essentials of the attorney-client relationship are not compromised.” Id. at 502.

With respect to the whistleblower claim, however, the supreme court commented that a “retaliatory discharge claim is more likely to implicate the attorney-client relationship, raising issues not only of divulging client confidences, but confidences that relate to client wrongdoing.” Id. at 504. But the supreme court stopped short of either adopting or rejecting a per se bar to a whistleblower claim, stating, “Any further discussion of the attorney-client defense here, however, would be academic because we agree with the trial court that as a matter of law there was no violation of the whistleblower statute.” Id. The court proceeded to affirm the district court on the ground that the plaintiff had failed to “identify any federal or state law or rule that was violated or suspected of being violated.” Id.

The second Minnesota case on point is Michaelson v. Minnesota Mining & Mfg. Co., 474 N.W.2d 174 (Minn.App.1991), aff'd mem., 479 N.W.2d 58 (Minn.1992). Mi-chaelson also was an in-house attorney who sued his employer, alleging contract claims, tort claims, and a whistleblower claim. Id. at 177. On Michaelson’s appeal from summary judgment, 3M’s first responsive argument was that an attorney is barred from bringing any claims against a former client. Id. at 178. The district court had not addressed the issue of a per se bar, even though it was raised by the defendant in the district court. Id. at 177. This court appears to have held that at least some of the plaintiffs claims were per se barred, stating:

Respondent here argues that appellant was respondent’s attorney and as such may not raise claims against respondent for events which arose during their attorney-client relationship. We agree. An attorney cannot properly bring a lawsuit against his client and transform confidential data generated in the course of representation into evidence against his client. Such conduct subverts the attorney-client privilege as well as the well-established principle that, as between an attorney and client, the power to terminate or modify the relationship must remain with the client.

Id. at 178. Despite this seemingly clear language, the court nonetheless stated: “However, because of the trial court’s ruling, we move on to consider appellant’s contention that the trial court [erred] when it granted summary judgment for respondent.” Id. This court then disposed of the whistleblower claim on the merits by identifying several reasons why the plaintiffs evidence was insufficient. Id. Thus, although the issue raised by Sybaritic in this case was raised by the defendant in Mi-chaelson and given favorable consideration, it appears that this court based its decision on the merits of the claim.

■ Even if this court had held in Michael-son that a former attorney-employee is barred from bringing any employment-related claims against a former client-employer, the bases of that holding no longer would be as solid as when the decision was issued, for two reasons. First, the Mi-chaelson court relied to a significant extent on this court’s decision in Nordling v. Northern States Power Co., 465 N.W.2d 81 (Minn.App.1991), rev’d, 478 N.W.2d 498 (Minn.1991), which had held only six months earlier that a per se bar applied. Id. at 86. But five months after this court’s decision in Michaelson, the supreme court reversed this court’s decision in Nordling and held that there was no per se bar to the contract claim. 479 N.W.2d 58. Kidwell argues that the supreme court in Nordling “overruled” Michaelson to the extent that Michaelson may have imposed a per se bar. That is too strong a statement. But the supreme court’s decision in Nordling did cast significant doubt on Michaelson’s favorable discussion of the attorney-client defense. Sybaritic, on the other hand, argues that the supreme court’s summary affirmance of Michaelson one month after its decision in Nordling indicates that the supreme court approved of this court’s reasoning in Michaelson. See 478 N.W.2d 498. But a summary af-firmance by the supreme court has “no precedential value because [it does] not commit the court to any particular point of view” other than to resolve the dispute between those parties. Hoff v. Kempton, 317 N.W.2d 361, 366 (Minn.1982). The supreme court has had two opportunities to decide the issue but has declined to do so each time.

Second, the Michaelson court’s discussion of this issue was based in significant part on the principle that “[a]n attorney cannot properly bring a lawsuit against his client and transform confidential data generated in the course of representation into evidence against his client” because “[s]uch conduct subverts the attorney-client privilege.” 474 N.W.2d at 178. But this premise may no longer be valid because of a 2005 amendment to the Minnesota Rules of Professional Conduct, which now permit a lawyer to reveal confidential information in ways that were not permitted at the time of the Michaelson decision:

A lawyer may reveal information relating to the representation of a client if:
(8) the lawyer reasonably believes the disclosure is necessary to establish a claim or defense on behalf of the lawyer in an actual or potential controversy between the lawyer and the client, to establish a defense in a civil, criminal, or disciplinary proceeding against the lawyer based upon conduct in which the client was involved, or to respond in any proceeding to allegations by the client concerning the lawyer’s representation of the client....

Minn. R. Prof. Conduct 1.6(b) (emphasis added). An ABA advisory ethics opinion stated the view that the model rule (which corresponds to the current version of the Minnesota rule) would apply to an in-house attorney’s retaliation claim against a former employer. The advisory opinion concludes:

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 1 Responsibility, Formal Op. No. 01-424 (2001) (emphasis added), reprinted in ABA/BNA Lawyers’ Manual on Prof'l Conduct 1201:112,:115 (2001). We do not necessarily endorse the conclusion reached in the advisory opinion; we merely note that the 2005 amendment to Minn. R. Prof. Conduct 1.6(b) may have altered the analysis that was prescribed by the Michaelson court.

Sybaritic urges us to adopt the reasoning of a few foreign cases that have applied a per se bar to lawsuits brought by former in-house attorneys. See, e.g., Balia, 164 Ill.Dec. 892, 584 N.E.2d at 108. The majority view, however, appears to reject the attorney-client defense and to permit such claims, though sometimes with the proviso that in-house attorneys may pursue such claims so long as they do not run afoul of the duty of confidentiality (a proviso that potentially could be applied as a bar). See, e.g., Crews v. Buckman Labs. Int’l, Inc., 78 S.W.3d 852, 857, 863-64 (Tenn.2002) (holding that in-house attorney may sue for retaliatory discharge in violation of public policy, subject to applicable confidentiality restrictions); General Dynamics Corp. v. Superior Court, 7 Cal.4th 1164, 32 Cal.Rptr.2d 1, 876 P.2d 487, 490 (1994) (holding that in-house attorney may sue for retaliatory discharge in violation of public policy unless suit cannot proceed without breach of attorney-client privilege); see also Heckman v. Zurich Holding Co., 242 F.R.D. 606, 608-09 (D.Kan.2007) (citing additional cases). Almost all of the cases cited to us, however, are concerned with common-law retaliation claims. It appears that only one other court has considered the issue in the context of a statutory whistleblower claim, and that court declined to adopt a per se bar. See Parker v. M & T Chem., Inc., 236 N.J.Super. 451, 566 A.2d 215, 220-21 (1989). The distinction is meaningful because Minnesota courts tend to avoid judicially created conditions or exceptions to the statutory language of the whistleblower act. See Anderson-Johanningmeier v. Mid-Minnesota Women’s Ctr., Inc., 637 N.W.2d 270, 277 (Minn.2002) (“rejecting] the importation of a public policy requirement into the whistleblower statute and holding] that the protections of section 181.932, subd. 1(a), are not limited to reports that implicate public policy”).

In sum, in light of the absence of clear, binding authority supporting Sybaritic’s argument, we hold that Kidwell’s whistle-blower claim is not per se barred by the so-called attorney-client defense.

II.

Sybaritic next argues that Kid-well did not engage in conduct that triggered the protections of the whistleblower act. The act provides that “[a]n employer shall not discharge, discipline, threaten, otherwise discriminate against, or penalize an employee” because 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.” Minn.Stat. § 181.932, subd. 1(a) (Supp.2007). The elements of proof at trial are essentially the same as the elements of a prima facie case. First, the plaintiff must prove that he engaged in statutorily protected conduct. Second, the plaintiff must prove that he was subjected to an adverse employment action. And third, the plaintiff must prove a causal connection between the statutorily protected conduct and adverse employment action. Gee v. Minnesota State Colls. & Univs., 700 N.W.2d 548, 555 (Minn.App.2005). The plaintiff carries the ultimate burden of persuasion on each element of proof. Grundtner v. University of Minn., 730 N.W.2d 323, 329 (Minn.App.2007).

There is no question that Kidwell proved the second element. In addition, Sybaritic has not challenged the sufficiency of the evidence establishing the third element. Thus, Sybaritic’s argument focuses on the first element. Kidwell’s theory at trial was that his difficult-duty e-mail constituted statutorily protected conduct. Sybaritic makes three arguments why the difficult-duty e-mail does not constitute protected activity under the whistleblower act.

A. Violation of Law

Sybaritic argues that Kidwell did not engage in protected activity because he did not prove “that any law had been broken” or that “there was even the threat that an illegality was about to happen.” The act protects an employee who “reports a violation or suspected violation” of a law or rule. Minn.Stat. § 181.932, subd. 1(a). The report must include “facts that, if proven, would constitute a violation of law or rule adopted pursuant to law.” Abraham v. County of Hennepin, 639 N.W.2d 342, 355 (Minn.2002). “While there need not be an actual violation of law, the reported conduct must at least implicate a violation of law.” Obst v. Microtron, Inc., 614 N.W.2d 196, 200 (Minn.2000). It is not necessary, however, for the report to identify the specific law or rule suspected of being violated, so long as there is a state or federal law or rule that is implicated by the employee’s report. Abraham, 639 N.W.2d at 354-55.

In response, Kidwell first argues that Sybaritic did not preserve this issue in the district court. Kidwell is correct; Sybaritic did not make this argument in its post-trial motion for judgment as a matter of law. Sybaritic did argue to the district court that Kidwell’s alleged report is not protected because it contained information of which Sybaritic already was aware. That argument raises a separate issue, which is considered below in part II.C. But Sybaritic has waived the argument that Kidwell’s report did not state facts that would make out a violation of law. See Thiele v. Stich, 425 N.W.2d 580, 582 (Minn.1988). Accordingly, we will assume without deciding that Kidwell “report[ed] a violation or suspected violation” of law or rule adopted pursuant to law, Minn.Stat. § 181.932, subd. 1(a), and that his report contained “facts that, if proven, would constitute a violation” of such a law or rule, Abraham, 639 N.W.2d at 355.

B. Report Within Scope of Duties

Sybaritic also argues that the alleged report on which Kidwell’s claim is based — the difficult-duty e-mail message— is not protected by the act because Kidwell merely was fulfilling his duties as the company’s in-house attorney when he composed and sent the message.

This argument can be resolved by a straightforward application of this court’s precedent. In two prior cases, this court clearly has held that a former employee may not maintain an action under the whistleblower act if the alleged report is a communication that was made to fulfill the employee’s job responsibilities. In Mi-chaelson, the whistleblower claim was alleged by a former in-house attorney who had responsibility for employment-law issues. 474 N.W.2d at 177. The whistle-blower claim was based on “several instances in which [Michaelson] investigated problems which arose from [the company’s] employment practices. Although [Michaelson] advised [the company] on the proper steps to resolve the problems, [the company] often did not follow [Michael-son’s] advice.” Id. at 180. This court affirmed the grant of summary judgment to the employer on several independent, alternative grounds. One of those independent grounds was that Michaelson “did not ‘report’ conduct, but rather gave his supervisor feedback, based upon his legal analysis, regarding proper proposed business decisions.” Id.

More recently, in Grundtner, an architect objected to his employer’s proposed plan to negotiate a contract for a construction project in a way that would have violated the law. 730 N.W.2d at 326. After Grundtner voiced his concerns to his supervisor, the employer did not follow through on the proposed plan. This court affirmed the district court’s grant of summary judgment in part because “[i]t was [Grundtner’s] job ... to ensure that the university did not engage in improper procurement methods.” Id. at 330. The court referred to Grundtner’s duties because, as the court explained in a parenthetical, a plaintiff does “not have a whis-tleblower claim when her stated purpose in reporting was to fulfill her responsibilities.” Id. (citing Gee, 700 N.W.2d at 556 (affirming summary judgment where plaintiff made alleged report “not with the purpose of exposing an illegality, but to contradict” information provided by supervisor during decisionmaking process)).

It is worth noting that the federal courts have interpreted the act in the same manner. In Share v. Extendicare Health Servs., Inc., 515 F.3d 836 (8th Cir.2008) (Murphy, J.), the United States Court of Appeals for the Eighth Circuit stated, “The whistleblower statute does not grant protection to an employee whose job duties require him or her to ensure legal compliance.” Id. at 841. The Eighth Circuit affirmed summary judgment for the former employer because “the nature of Skare’s internal complaints was to carry out her regular job duties as opposed to exposing wrongdoing.” Id. Similarly, in Freeman v. Ace Tel. Ass’n, 404 F.Supp.2d 1127 (D.Minn.2005), aff'd 467 F.3d 695 (8th Cir.2006), the United States District Court for the District of Minnesota stated, “A report that is presented as part of an employee’s job duties is not a report under the Act.” Id. at 1139.

Thus, Michaelson and Grundtner hold that an employee does not engage in protected conduct under the whistleblower act if the employee makes a report in fulfillment of the duties of his or her job. This rule is in harmony with the statutory requirement of “good faith,” Minn.Stat. § 181.932, subd. 1(a), and the caselaw instructing that “to determine whether a report ... is made in good faith, we must look not only at the content of the report, but also at the reporter’s purpose in making the report.” Obst, 614 N.W.2d at 202. In determining a “reporter’s purpose,” the “central question is whether the reports were made for the purpose of ... exposing] an illegality.” Id. The caselaw essentially presumes that when an employee performs the duties of his or her job, the employee acts not with the purpose of exposing an illegality but, rather, only with the purpose of promoting the employer’s interests. Cf. Sanitary Farm Dairies, Inc. v. Wolf, 261 Minn. 166, 176, 112 N.W.2d 42, 49 (1961) (discussing employee’s duty of loyalty and exploring “line ... between preparation for a change in employment and outright disloyalty to the employer”). In this way, the rule is consistent with an attorney’s most basic duties to his or her client — to be competent, to be diligent, to use good judgment, to render candid advice, and to avoid conflicts of interest. See Minn. R. Prof. Conduct 1.1, 1.3, 1.7(a)(2), 2.1. If a contrary rule were to govern, an in-house attorney might engage in protected activity every day because attorneys routinely work with laws and rules and routinely consider violations and suspected violations of laws and rules.

Applying the precedent to this case, the evidence establishes that Kidwell wrote the difficult-duty e-mail to fulfill the duties of his position. He was the company’s general counsel, a position typically (though not always) vested with overall responsibility for all legal matters. He sent the e-mail to the company’s top executives, including the owner and president, who was his direct supervisor. Kidwell’s written employment agreement states that his duties include “responsibility and decisions as to all corporate legal matters, and the general legal administration of activities at Sybaritic.” The agreement also makes express reference to the NeoQi lawsuit, and Kidwell was playing an active role in that lawsuit. All of the issues raised in the difficult-duty e-mail were matters about which Kidwell previously had advised the company, and Kidwell apparently was the only attorney employed by the company. More specifically, Kid-well’s own words demonstrate conclusively that he wrote and sent the difficult-duty email to fulfill his job responsibilities. In the e-mail itself, he wrote, “I cannot fail to write this e-mail without also failing to do my duty to the company and to my profession as an attorney. That I will not do.” And at trial, he testified that he sent the difficult-duty e-mail “[bjecause I hoped that we could pull this company back into compliance by enlisting some of the other members of management, and as the person responsible for the legal affairs of the company, that’s what I had to do.”

Kidwell argues that the difficult-duty email is protected by the whistleblower act because he “went beyond the scope of his job duties.” But this argument is inconsistent with the evidence recited above, which shows that Kidwell himself believed the email to be within the scope of his duty to his client and employer. Kidwell also points out that he wrote the difficult-duty e-mail “outside of regular business hours, on his own time, and not in the normal course of business.” This argument does not negate the evidence recited above. Furthermore, the argument is inconsistent with the reality that an attorney’s work is not necessarily limited in space and time to a law office or the traditional workweek. Kidwell also attempts to distinguish this case from Michaelson by saying that the plaintiff in that case gave “feedback” while he “made an unambiguous report that the company was intentionally violating the law, and he threatened to go to the authorities.” This is a distinction without a difference. The operative facts of the two cases are indistinguishable; in each case, an in-house attorney provided legal advice to his employer, and the employer took adverse employment action (or was alleged to have done so) based on the advice.

Thus, as a matter of law, Kidwell’s difficult-duty e-mail does not constitute protected conduct under the whistleblower act because he wrote and sent the difficult-duty e-mail in fulfillment of the duties of his position of employment. Consequently, Kidwell’s evidence was insufficient to prove a whistleblower claim.

C. Report of New Information

Sybaritic also argues that the difficult-duty e-mail is not protected' conduct because Sybaritic already knew about each of the issues raised in the e-mail. This argument goes to the statutory requirement that a whistleblower make a report “in good faith.” See Minn.Stat. § 181.932, subd. 1(a). The supreme court has stated:

Under the whistle-blower statute, establishing that an employee reported violations or suspected violations of law to his or her employer does not end the inquiry. The critical question of whether those reports were made in good faith must also be answered. In order to determine whether a report of a violation or suspected violation of law is made in good faith, we must look not only at the content of the report, but also at the reporter’s purpose in making the report. The central question is whether the reports were made for the purpose of blowing the whistle, i.e., to expose an illegality. See Minn.Stat. § 181.932, subd. 1(a). We look at the reporter’s purpose at the time the reports were made, not after subsequent events have transpired.... In part, the rationale for looking at the reporter’s purpose at the time the report is made is to ensure that the report that is claimed to constitute whistle-blowing was in fact a report made for the purpose of exposing an illegality and not a vehicle, identified after the fact, to support a belated whistle-blowing claim.

Obst, 614 N.W.2d at 202.

The plaintiff in Obst reported to his supervisor that the company was not in compliance with federal regulations governing motor-vehicle safety. The employee purportedly made the report to cause his employer to inform a customer of the employer’s non-compliance. But “at the time the reports were made” to the employer, the customer “was well aware that [the employer] was shipping and it was receiving defective” products. Id. In addition, at the time of the report, both the employee and the employer knew that the customer was aware of the defective products. The supreme court concluded that “there was no whistle to blow” and that the plaintiff “cannot be said to have been trying to expose what was so openly known and acknowledged” by both the employer and the customer. Id. at 203. Thus, based on “the content of [the plaintiffs] reports and his purpose in making” them, the reports “did not constitute good faith reports under the whistle-blower statute.” Id. In somewhat similar reasoning, this court has held that an employee did not make a “report” by mentioning to the company CEO an issue of which the CEO already was aware and was investigating. Rothmeier v. Investment Advisers, Inc., 556 N.W.2d 590, 593 (Minn.App.1996), review denied (Minn. Feb. 26, 1997); see also Cokley v. City of Otsego, 623 N.W.2d 625, 630 (Minn.App.2001) (holding that plaintiff could not base whistleblower claim on report of information that had been disclosed to city council two years earlier), review denied (Minn. May 15, 2001).

The evidence is clear that Sybaritic management already was aware of three of the issues mentioned in the difficult-duty e-mail: the kickback scheme, the unauthorized-practice-of-medicine issue, and the issue of California sales tax. In previous months, Kidwell had numerous discussions with Sybaritic executives about those issues, all three of the issues were resolved, and Kidwell did not communicate any new information concerning those three issues in the difficult-duty e-mail. Kidwell explained at trial that he was primarily concerned about the NeoQi e-mails and referred to the three other issues because he “wanted management to understand that my concerns about those [NeoQi] e-mails weren’t an isolated concern and that there was a pattern of noncompliance with legal obligations that I felt had to stop for the health of the company.” Although Obst does not establish an absolute rule, see 614 N.W.2d at 203 & n. 5, the evidence in the record of this ease, including Kidwell’s own testimony, makes clear that when Kidwell prepared the difficult-duty e-mail, he did not include the issues of the kickback scheme, the unauthorized practice of medicine, and California sales tax “for the purpose of ... exposing] an illegality.” Obst, 614 N.W.2d at 202.

Kidwell’s communication of information concerning the NeoQi e-mails must be considered separately. In denying Sybaritic’s post-trial motion, the district court reasoned that the e-mail message was the first time that Kidwell had accused Sybaritic of obstructing justice and, thus, the first time that he had identified a violation or suspected violation of law. Kidwell previously had talked with Daffer about the emails and their potential impact on the lawsuit, and in part of that discussion he had advised Daffer to consider the potential benefits of a settlement with NeoQi. But that conversation occurred before Kid-well traveled to Estonia, before Daffer instructed Carlson to substitute the disk that had been sent to Atmore, and before At-more communicated his spoliation concerns to Kidwell. Not until those events did Kidwell develop a suspicion of a violation of a law or rule — the suspected violation that was communicated to Sybaritic’s management in the difficult-duty e-mail. The suspected violation of law related to the NeoQi e-mails that Kidwell expressed in the difficult-duty e-mail had not been communicated earlier but, rather, was communicated to Sybaritic’s management for the first time in that e-mail message. Thus, we reject Sybaritic’s argument that the difficult-duty e-mail is not protected by the whistleblower act on the ground that the e-mail did not communicate new information.

In sum, for the reasons stated above in part II.B., the district court erred by denying Sybaritic’s post-trial motion for judgment as a matter of law.

DECISION

Kidwell’s action against his former employer under the Minnesota Whistleblower Act is not per se barred because he was employed as an in-house attorney. But Kidwell did not engage in conduct protected by the Minnesota Whistleblower Act because he was fulfilling the responsibilities of his position of employment when he sent an e-mail message communicating a suspected violation of law. Thus, the evidence was insufficient to prove a whistle-blower claim, and the district court erred by denying Sybaritic’s motion for judgment as a matter of law. In light of our resolution of the second issue raised by Sybaritic, we need not address the remainder of the parties’ arguments, which now are moot.

Reversed.

LANSING, Judge

(dissenting).

In Nordling v. N. States Power Co., 478 N.W.2d 498, 499 (Minn.1991), the supreme court held that in-house attorneys can sue for wrongful discharge. In the course of that decision, the supreme court suggested that in-house attorneys might similarly sue under the whistleblower statute. Id. at 504. In today’s opinion, however, the majority constructs an exception to the statute that strips an in-house attorney of whistleblower protection for exposing illegalities within the corporate structure. Because this duty-rule exception has no support in the text of the whistleblower statute, I respectfully dissent.

The public-policy considerations that form the general basis for whistleblower protection also apply to in-house attorneys because they face the same pressures as ordinary employees. As Justice Arabian explained for the California Supreme Court, in-house attorneys do not have the economic protection provided by a diverse portfolio of legal work:

Unlike the law firm partner, who typically possesses a significant measure of economic independence and professional distance derived from a multiple client base, the economic fate of in-house attorneys is tied directly to a single employer, at whose sufferance they serve. Thus, from an economic standpoint, the dependence of in-house counsel is indistinguishable from that of other corporate managers or senior executives who also owe their livelihoods and career goals and satisfaction to a single organizational employer.
Moreover, the professional relationship between the in-house attorney and the client is not the “one shot” undertaking- — drafting a will, say, or handling a piece of litigation — characteristic of the outside law firm. Instead, the corporate attorney-employee, operating in a heavily regulated medium, often takes on a larger advisory and compliance role, anticipating potential legal problems, advising on possible solutions, and generally assisting the corporation in achieving its business aims while minimizing entanglement in the increasingly complex legal web that regulates organizational conduct in our society. This expansion in the scope and stature of in-house counsel’s work, together with an inevitably close professional identification with the fortunes and objectives of the corporate employer, can easily subject the in-house attorney to unusual pressures to conform to organizational goals, pressures that are qualitatively different from those imposed on the outside lawyer. Even the most dedicated professionals, their economic and professional fate allied with that of the business organizations they serve, may be irresistibly tempted to cut corners by bending the ethical norms that regulate an attorney’s professional conduct.

Gen. Dynamics Corp. v. Superior Court, 7 Cal.4th 1164, 32 Cal.Rptr.2d 1, 876 P.2d 487, 491-92 (1994). The General Dynamics approach has been adopted by several other states. Crews v. Buckman Labs. Int’l, Inc., 78 S.W.3d 852, 859-62 (Tenn.2002); Burkhart v. Semitool, Inc., 300 Mont. 480, 5 P.3d 1031, 1036-39 (2000); GTE Prods. Corp. v. Stewart, 421 Mass. 22, 653 N.E.2d 161, 165-68 (1995); Willy v. Coastal States Mgmt. Co., 939 S.W.2d 193, 199-200 (Tex.App.1996). The corporate scandals of the past decade only confirm the need to protect in-house counsel’s ability to report illegal conduct.

But I would not resolve this case based on economic analysis or policy. The legislature already addressed those issues when it enacted the whistleblower statute, Minn.Stat. § 181.932 (Supp.2007). We are instead addressing a question of statutory interpretation, which we review de novo. Educ. Minn.-Osseo v. Indep. Sch. Dist. 279, 742 N.W.2d 199, 201 (Minn.App.2007), review denied (Minn. Feb. 19, 2008). If the statute is unambiguous, we must apply its plain meaning. Id.

The whistleblower statute prohibits retaliation against an employee because “the employee, or a person acting on behalf of an 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.” Minn. Stat. § 181.932, subd. 1(a). Under the plain terms of the statute, an employee can recover by showing (1) the employee made a report to the employer, (2) the report was made in good faith, (3) the report was of a violation or suspected violation of law, and (4) the employee was retaliated against because of the report. Id.; see also Hedglin v. City of Willmar, 582 N.W.2d 897, 902 (Minn.1998) (concluding that whistleblower statute “clearly and unambiguously protects reports made of a violation of any federal or state law or rule adopted pursuant to law”).

The majority concludes that Kidwell failed to prove his whistleblower claim because he had a duty as an in-house attorney to report illegal activity. But nothing in the statute supports this limitation. The report need only be made in good faith and report a violation or suspected violation of law. The content and purpose of the report is properly considered within the requirement of good faith. The district court correctly instructed the jury on these elements and the jury made its determination. The majority now overturns that determination by imposing a duty doctrine that supersedes the jury’s determination of purpose.

In support of this “duty doctrine,” the majority relies on three of this court’s cases — Grundtner v. Univ. of Minn., 730 N.W.2d 323 (Minn.App.2007), Gee v. Minn. State Colls. & Univs., 700 N.W.2d 548 (Minn.App.2005) (Lansing, J.), and Michaelson v. Minn. Mining & Mfg. Co., 474 N.W.2d 174 (Minn.App.1991), aff'd mem., 479 N.W.2d 58 (Minn.1992). Although the reports in these cases did involve the plaintiffs’ job responsibilities, the decisions all had one simple fact in common: the plaintiffs did not report illegal conduct. See Grundtner, 730 N.W.2d at 329-30 (holding that report failed to allege illegal conduct); Gee, 700 N.W.2d at 556 (holding that report failed to implicate violation of law and was not made in good faith); Michaelson, 474 N.W.2d at 180 (holding that, in giving feedback about proposed business decision, plaintiff did not report conduct that was violation or suspected violation of law). The statute protects whistleblowers, not complainers. But the statute does not create a wholesale exemption for an employee who has, as part of his or her job description, the duty to provide legal advice to the corporation or its management.

I agree with the majority’s analysis in the first part of the opinion — that an in-house attorney is not per se barred from bringing a whistleblower suit. I also agree that the evidence, which includes Kidwell’s testimony about why he made the report and the contents of the report itself, support the jury’s determination that the report was made in good faith. But I do not agree that this court has established or should establish a duty doctrine that categorically provides that an in-house attorney, who suffers an adverse employment action for a good-faith report of an illegality, has no protection under the whistle-blower statute because that in-house attorney is employed to provide legal advice. I would affirm the jury’s verdict, and I respectfully dissent.

      . The dissent relies on the California Supreme Court's comparisons of attorneys in private practice and attorneys in corporate law departments. See infra at D-l. We are not confident that those views are an accurate description of today's legal workforce. Various observers have reported that in-house counsel now are considerably more mobile than in prior years, with a greater tendency to move between in-house positions and to move back and forth between private practice and corporate positions. See, e.g., Molly McDonough, Moving Targets, A.B.A. J., Dec. 2006, at 20. Kidwell himself went from private practice to an insurance company and back to private practice again before joining Sybaritic in the 21st year of his legal career. Meanwhile, an attorney in private practice may be just as likely as an in-house attorney to have a long-term relationship with a corporation, which creates a different type of dependence for outside counsel. Thus, it is not clear that the “pressures to conform to organizational goals,” General Dynamics Corp. v. Superior Court, 7 Cal.4th 1164, 32 Cal.Rptr.2d 1, 876 P.2d 487, 491-92 (1994), are greater for in-house attorneys. The California case raises interesting questions, but it is unnecessary to resolve them here. In short, we do not believe that the views of the California Supreme Court should cause this court to depart from its precedent.

      . Because of the resolution of this issue, we need not resolve Sybaritic’s argument that the district court improperly instructed the jury. But the instructions should not receive the benefit of any doubt. The instructions ignored Sybaritic’s theory of the defense because they did not incorporate the rule that an in-house attorney does not engage in protected conduct if an alleged report is a communication made to the client-employer in fulfillment of the attorney-employee’s job responsibilities. See, e.g., Kirseborn v. Connelly, 486 N.W.2d 172, 174 (Minn.App.1992) ("A party is entitled to a jury instruction that sets forth his or her theory of the case if the evidence supports it and if it is consistent with applicable law.”). The district court’s insertion of the words “job and” did not suffice, and Sybaritic makes a strong argument that those words exacerbated the problem by allowing the jury to find that Kidwell’s fulfillment of his general counsel duties made his whistleblower claim stronger. In her closing argument, Kidwell’s counsel skillfully exploited the absence of a meaningful instruction on the issue by presenting a single, very simple question to the jury: "you are charged with deciding whether Brian Kidwell was terminated because of the difficult duty e-mail or whether he was terminated for legitimate reasons.” There was no instruction that the jury could have used to conclude that, under the whistleblower act, the difficult-duty e-mail was not an unlawful reason for termination.


source: Caselaw Access Project

author: SATHRE, Judge.

license: Public Domain

text:
    STATE of North Dakota ex rel. PUBLIC SERVICE COMMISSION, Respondent, v. NORTHERN PACIFIC RAILWAY COMPANY, a corporation, Appellant, and A. L. Ford, Sr., Dale Langford and Lester W. Miller, on behalf of themselves and all others similarly situated, Interveners.
    No. 7509.
    Supreme Court of North Dakota.
    Feb. 17, 1956.

      Conmy & Conmy, Fargo, for appellant.
    R. W. Wheeler, Asst. Atty. Gen., for respondent.
    Gallagher & Paul, Mandan, for inter-veners.
   SATHRE, Judge.

This is a mandamus proceeding brought by the Public Service Commission of the State of North Dakota against the Northern Pacific Railway Company, a foreign corporation.

The facts in the case are substantially as follows:

On November 15, 1954 a representative of the Northern Pacific Railway Company made a courtesy call at the office of the Public Service Commission. He advised the Commission that the Railway Company intended to discontinue mixed trains Nos. 175 and 176 over its Linton Mandan Branch Line and substitute tri-weekly service. He made it clear to the Commission that the railway company was proceeding on its own initiative in making the change and was not asking the approval of the Commission or submitting to its jurisdiction, as it was felt that this was not required or necessary. On November 23, 1954 the Railway Company wrote a letter to the Public Service Commission inclosing a copy of a public notice which had been posted by the railway company in the depots at McKenzie, Hazel-ton, Temvik and Linton concerning the change in the Northern Pacific Linton Branch train service which was to be effective November 29, 1954. The notice enclosed is as follows:

“Public Notice
“Effective November 29, 1954, Northern Pacific mixed trains 175 and 176, between Mandan and Linton, daily except Sunday, will be discontinued.
“Effective same date, the Northern Pacific Railway will inaugurate local freight service leaving Jamestown, North Dakota, on Monday, Wednesday and Friday and will leave Linton on Tuesday, Thursday and Saturday. Milk, cream and express shipments will be handled in this service and make connections with main line passenger trains at McKenzie.
“F. W. McCabe,
“Superintendent.”

On November 27, 1954 the Public Service Commission issued an ex parte order directed to the Northern Pacific Railway Company requiring it to continue the service of trains Nos. 175 and 176 between Mandan and Linton, North Dakota, which order is as follows:

“It Appearing That on the 24th day of November, 1954, the Northern Pacific Railway Company notified this Commission of its intention to discontinue its mixed trains number 175 and 176 between Mandan, North Dakota, and Linton, North Dakota, and
“It Appearing That this Commission has not received the required 30 days notice of such change in service; Now, Therefore, pursuant to resolution of the Public Service Commission of the State of North Dakota, duly adopted the 27th day of November, 1954, it is Ordered, that the Northern Pacific Railway Company, be and are hereby required to continue the present service provided by its Trains Nos. 175 and 176, between Mandan and Linton, until further order of this Commission. Dated at Bismarck, North Dakota, this 27th day of November, 1954.
“By Order of the Public Service Commission.
“Elmer Olson, Secretary”

On December 4, 1954 the Railway Company wrote to the Public Service Commission a letter in which it stated that it declined to comply with the Commission’s order of November 27, 1954 for the reason that the said order was made ex parte without giving the railway company an opportunity to be heard and that the said order was wholly without jurisdiction, void and of no effect. The letter is as follows:

“Dec. 4, 1954
“Subject: Linton Branch Train Service
“Public Service Commission
“State Capitol
“Bismarck, North Dakota. ■
“Gentlemen:
“On November 15, 1954, we made a courtesy call at your office to advise you that the Northern Pacific Railway Company intended to discontinue mixed Trains 175 and 176 over its Linton Branch Line and substitute triweekly service. We made it clear to you that we were proceeding on our own initiative in making the change and not asking your approval or submitting to your jurisdiction as we did not feel this was required or necessary. Your Commerce Counsel agreed with us that no thirty day notice was required because of Section 49-0505.
“On November 23, 1954, we sent you a copy of the Notice of this change of service that had 'been posted in our depots.
“On November 27, 1954, you made an order requiring the Northern Pacific Railway Company to continue the present service provided by Trains Nos. 175 and 176 until further order of the Commission. This order was made ex parte and without giving us any opportunity to be heard and was wholly without jurisdiction, void and of no effect, in Our opinion. We must, therefore, respectfully decline to be bound by it.
“Our Operating and Accounting officials estimate that the proposed change will save between $80,000 and $100,000 in operating expenses per year. This large saving could be used to improve the Northern Pacific train service on mainline in North Dakota and between other points in the State and elsewhere where the public will use the trains and be benefited by the service. Our figures show that on the Linton Branch for several years there has been very little use by the public of the passenger trains. On the average, less than one passenger per day has used the train between Mandan and Linton or between intermediate points, and certainly such little use by the public does not justify the operation of the trains.
“The Northern Pacific Railway Company has always cooperated in every way with the Public Service Commission and has forever striven to be a good citizen of the State of North Dakota. We desire to continue to cooperate with the Commission and to obey all of its lawful orders, but, feeling as we do, that the order in the instant matter is wholly without authority in law, the Railway Company feels that it is not being uncooperative in advising your Honorable Body that the order will be disregarded and mixed trains 175 and 176 between Mandan and Linton will be discontinued effective December 6, 1954. On the same date the Railway Company will inaugurate local freight service leaving Jamestown, North Dakota, on Monday, Wednesday and Friday and will leave Linton on Tuesday, Thursday and Saturday. Milk, cream and express shipments will be handled in this service and make connections with mainline passenger trains at McKenzie. The mail has been taken from the trains and is now being handled by Star Route and the citizens of the towns affected are actually receiving better mail service than was being afforded by the passenger trains.
“Yours truly,
“Northern Pacific Railway Company
“By Conmy & Conmy, Its Attorneys.”

Thereafter the Public Service Commission made an application to the District Court, 6th Judicial District, Morton County, North Dakota for an alternative writ of mandamus requiring the Northern Pacific Railway Company to show cause on the 17th day of December 1954 at 10 o'clock A.M. at Mandan, North Dakota, why it should not comply with the order of the Commission issued on November 27, 1954. Thereupon the said District Court, the Hon. Mark H. Amundson, Judge, issued an alternative writ of mandamus which is as follows:

“To Northern Pacific Railway Company :
“On the 7th day of December, 1954, application was made to this Court by the North Dakota Public Service Commission charging the above-named railroad corporation with non-compliance and disregard of a lawful order of said Commission made and entered in Docket No. 5270 and dated November 27, 1954 requiring said railroad to continue to operate its Trains Nos. 175 and 176 between Mandan and Linton, North Dakota, daily except Sunday until further order of said Commission.
“Please take notice that it is the order of this Court, based upon said verified application, that the Northern Pacific Railway Company either comply with said order of the Public Service Commission or show cause before this Court why it should not comply with said order, in the District Court Rooms of the Morton County Court House in Mandan, North Dakota, at 10 o’clock A.M., M.S.T., or as soon thereafter as counsel may be heard, on the 17th day of December, 1954.
“Dated at Mandan, North Dakota, this 7th day of December, 1954.
“By the Court:
“Mark H. Amundson, Judge.”

In its return to the alternative writ of mandamus the railway company admitted its corporate existence, that prior to December 4, 1954 it had operated trains Nos. 175 and 176 between Linton and Mandan, and that on December 6, 1954, it discontinued the operation of said trains over the Linton branch, and that in its letter of December 4, 1954 to the Public Service Com-missioh, the Commission was advised of the intention of the railway company to substitute other service on the said Linton branch.

The return then alleges that said order of the Commission made on November 27, 1954, was made ex parte upon the oral request of A. L. Ford, Sr., State Legislative representative of the Brotherhood of Railway Trainmen, without the filing of a statement or complaint and without the issuance of a notice of hearing, and without serving of any notice, upon the railway company and without furnishing the railway company with any written specification of the issues to be considered, or giving it opportunity to be heard and to present evidence as required by the statutes of the State of North Dakota, and that said order was wholly illegal and void and made without jurisdiction or power.

A hearing was had upon said alternative writ of mandamus on the 17th day of December, 1954, and after said hearing and on the 18th day of January, 1955 the District Court made and entered its peremptory writ of mandamus commanding the railroad company to obey and comply with the order of the Public Service Commission dated November 27, 1954.

Judgment was entered on the 18th day of January 1955 in accordance with the peremptory writ of mandamus commanding the railway company to obey the order of the Public Service Commission made on the 27th day of November, 1954. The railway company appealed to the supreme court from the said judgment.

On January 5, 1955 the district court, after hearing, made its order that A. L. Ford, Sr., Dale Langford, and Lester W. Miller, on behalf of themselves and others similarly situated, be permitted to intervene as petitioners. The said A. L. Ford is a resident of the State of North Dakota and in the employ of the Minneapolis, St. Paul & Sault Ste. Marie Railroad Co., doing business in the State of North Dakota, and is a member of the Brotherhood of Railway Trainmen, and is a legislative representative of said Brotherhood. Dale Langford is a resident of the State of North Dakota, an employee of the Minneapolis, St. Paul & Sault Ste. Mark Railroad Co., and a member of the Brotherhood of Locomotive Firemen and Enginemen and legislative representative for said Brotherhood. Lester Miller is a resident of the state of North Dakota, an employee of the Northern Pacific Railway Co., and a member of the Order of Railway Conductors and Brakemen and legislative representative of said order.

Upon application of the appellant Railway Company and after hearing, the district court issued an order on February 3, 1955, requiring the Railway Company .to furnish a statutory cost bond in the sum of $250 and a supersedeas bond in the sum of $5,000 and providing that upon furnishing such bonds a stay of all proceedings be had pending determination of the appeal and for a period of twenty days after the remittitur is filed in the district court. The bonds were furnished as provided by the order.

The interveners appealed to the supreme court from the order of the district court permitting the appellant railway company to furnish a supersedeas bond and granting a stay of proceedings, except the entry of judgment, until final determination of the case.

It is contended by the Public Service Commission that the defendant railway company had failed to give 30 days, notice before discontinuing trains Nos. 175 and 176 as required by Section 49-0505, NDRC 1943. Said section reads as follows:

“No change shall be made by any public utility in any tariffs, rates, joint rates, fares, tolls, schedules, classifications, or service which have been filed and published by any public utility, except after thirty days’ notice to the commission. Such notice shall state plainly the changes proposed. The commission for a good cause shown, may allow changes upon less than the notice herein specified, either in particular instances or by a general order applicable to special or peculiar circumstances or conditions.”

In the instant case the Commission was advised by the Railway Company that it was not seeking the approval or authority of the Commission to discontinue trains Nos. 175 .and 176, but that it proceeded solely on its own initiative. The Commission then proceeded to issue its ex parte order of November 27, 1954. Thereafter the Railway Company notified the Commission that it declined to obey such order upon the grounds that the same was illegal and void. The Commission then brought the instant mandamus proceeding and obtained the peremptory order requiring the Railway Company to comply with the order issued on November 27, 1954. The Railway Company contends that the order of the Commission of November 27, 1954 is void for the reason that there was no compliance with any of the provisions of Sections 28-3205 and 28-3208, 1953 Supp. to NDRC 1943 which are as follows:

Section 28-3205:
“1. In all proceedings brought before an administrative agency having jurisdiction of the subject matter, the petitioner, or the administrative agency when acting upon its own initiative, shall prepare and file a clear and concise statement or complaint with the agency having jurisdiction of said proceeding. Said complaint shall contain a concise statement of the claims ,or charges upon which the petitioner relies, and the relief sought. Upon the filing of such complaint, the appropriate administrative agency shall issue a notice for hearing, which shall fix the time and place for trial thereof up-' on its merits. Said notice shall inform the party proceeded against that unless an answer to such complaint is served upon the petitioner and agency giving such notice at least three days before the time specified for hearing therein that the complaint will be deemed admitted, and that the agency will enter such order as the facts and law may warrant. A true copy of the complaint and notice of hearing shall be served Upon the respondent • personally, or by registered mail, as the agency may direct, at least twenty days before the time specified for hearing thereof unless the service of such complaint or notice of hearing is waived, in writing, by the party proceeded against, or unless the parties agree upon a definite time and place for hearing thereof with the consent of the agency having jurisdiction. Provided, however, that in case of an emergency the agency, in its discretion, may notice a proceeding for hearing upon the merits upon less than twenty days’ notice. Every party to such proceeding shall be given a reasonable time within which to prepare for such hearing, which may be extended by the agency upon good cause being shown by the applicant therefor.”
Section 28-3208:
“Whenever an administrative agency, pursuant to authority conferred upon it by law, shall institute an investigation upon its own motion or without the filing of a specified complaint, or shall hold any hearing or make any independent investigation upon the claim or request of any person, no decision shall be made by the agency until all parties in interest shall have been furnished with a written specification of the issues which are to be considered and determined, nor until an opportunity shall have been afforded to such parties to present evidence and to be heard upon the precise issues so specified. Provided, however, that the commissioners of the workmen’s compensation bureau may make awards without the giving of the notice herein provided for.”

These statutes were considered by this court in the case of Petition of Village Board of Wheatland, 77 N.D. 194, 42 N.W.2d 321, 331, 335. In that case we held that the powers of the Public Service Commission must be exercised in accordance with the statutes .granting such powers. We quote from the opinion:

“The constitution of this state provides that ‘the powers and duties’ of the Public Service Commissioners ‘shall be prescribed by law.’ N.D. Const. Sec. 83. The statutes of this state prescribe the manner in which such powers are to be exercised. The powers conferred upon the commissioners ‘must be exercised in accordance with the statute bestowing such powers and they can act only in the mode prescribed by the statute. * * They cannot rightfully dispense with any of the essential forms of proceedings which the legislature has prescribed for the purpose of investing them with power to act. A commission may not assert the general power given it and at the same time disregard the essential conditions imposed upon its exercise.’ 42 Am.Juris., Public Administrative Law, Sec. 68, p. 379. While there are differences in the origin and functions of courts and administrative agencies which preclude ‘the wholesale transportation to administrative proceedings of the. rules of procedure, trial, and review which have evolved from the history and experience of courts,’ and as a general rule such proceedings are not restricted by the same technical and formal rules which govern trials before a court, nevertheless, ‘in the exercise of judicial or quasi-judicial powers, the elementary and fundamental principles of judicial inquiry should be observed.’ 42 Am.Juris., p. 446; Pigeon’s Case, 216 Mass. 51, 102 N.E. 932, Ann.Cas. 1915A, 737.”

Assuming, but not deciding, that the action of the Railway Company in discontinuing trains Nos. 175- and 176 was without authority of law, nevertheless, under the provisions of Sections 28-3205 and 28-3208, supra, the Commission was without jurisdiction to make any decision or order until the Railway Company had been furnished with written specifications of any issues to be considered and determined, and until it had been afforded an opportunity to present evidence upon the issues involved.

The Public Service Commission contends that under the provisions of Section 49-0202, NDRC 1943 it is granted power to require public utilities to conform to the laws of the State. Said Section 49-0202 provides that the Commission shall have power:

“1. To investigate all methods and practices of public utilities or other persons, subject to the provisions of this title;
“2. To require them to conform to the laws of this state and to all rules, regulations, and orders of the commission not contrary to law; * * *
“4. To compel obedience to its lawful orders by proceedings of mandamus or injunction or other proper proceedings, in the name of the state, in any court having jurisdiction of the parties or of the subject matter; and
“5. To shorten the period for which notice shall be given prior to hearing, when good cause exists for such action. Such notice, however, shall be reasonable in view of the nature, scope, and importance of the hearing.”

It will be noticed that under the provision of Subsection 4 quoted above the Commission has power to compel obedience to its lawful orders by proceedings of mandamus or injunction or other proper proceedings in the name of the State, in any court having jurisdiction of the parties or the subject matter. However, in a proceeding by injunction or mandamus to compel obedience to any order, the Commission must comply with the statutory requirements of procedure. In the instant case it is conceded that the order issued by the Commission on November 27, 1954 was an ex parte order and that it was issued without the service of any notice upon the Railway Company and without specifying any complaint; nor did it require the Railway Company to show cause why it should not continue the operation of trains Nos. 175 and 176. Further, under the statute quoted if the matter was of great importance the Commission could fix a hearing upon short notice because the Commission has the power to shorten the period for which notice shall be given prior to any hearing when good cause exists for such action.

It is clearly established by the record that the Public Service Commission in issuing its order of November 27, 1954, was attempting to assert and exercise a general power given it without complying with jurisdictional requirements imposed by statute for such exercise. We conclude that the order of the Commission of November 27, 1954 was a nullity and that the judgment entered in the mandamus proceedings to enforce said order was erroneous. It follows also that the attempted appeal of the interveners was without any legal effect.

The judgment of the district court is reversed and the case remanded with directions to vacate its judgment entered herein.

BURKE, C. J., and MORRIS, JOHNSON and GRIMSON, JJ„ concur.


author: BURKE, Chief Justice. BURKE, Chief Justice.

text:
    H. M. BLANDIN, Plaintiff and Respondent, v. BENEFIT ASSOCIATION OF RAILWAY EMPLOYEES, a Corporation chartered in the State of Illinois, Defendant and Appellant.
    No. 7476.
    Supreme Court of North Dakota.
    Jan. 17, 1956.
    Rehearing Denied March 5, 1956.

      Cox, Cox, Pearce & Engebretson, Bismarck, for appellant.
    Lord, Ulmer, & Murphy, Mandan, for respondent.
   BURKE, Chief Justice.

This action is one to recover upon a policy of hospitalization insurance. The plaintiff alleged in his complaint that defendant was indebted to him in the sum of $504.44 under the terms and conditions of its policy. In its answer the defendant alleged full payment to the plaintiff of its entire liability under the policy. The issues in the case were tried to a jury and a verdict was rendered in favor of the plaintiff. Defendant immediately moved for judgment notwithstanding the verdict. This motion was denied and judgment in accordance with the verdict was entered. Defendant has appealed from the judgment.

The specifications of error on this appeal relate solely to the question of the sufficiency of the evidence to sustain the verdict. That evidence is for the most part undisputed.

Plaintiff’s deceased wife first entered the hospital on November 27, 1951. The preliminary diagnosis and cause for her hospitalization was an intestinal obstruction. Upon operation to correct or remove the obstruction it was found that the deceased had carcinoma with metastasis. The carcinoma had already spread from its original location in an ovary and had produced a tumerous growth which caused the intestinal obstruction. The operation included removal of the ovaries and a colostomy. Deceased was released from the hospital on December 24, 1951. On January 29, 1952, deceased reentered the hospital for the purpose of having the colostomy closed. She was discharged January 30, 1952. On December 17, 1952, she again entered the hospital because another intestinal obstruction had developed. The site of the colostomy was reopened and what repairs could be made, were made. She was discharged on December 23, 1952. On February 23, 1953, deceased again entered the hospital where she remained until she died on May 29, 1953. To recapitulate deceased’s periods of hospitalization were as follows:

Nov. 27, 1951, through Dec. 24, 1951 .27 days
Jan. 29, 1952, “ Jan. 30, 1952 . 2 “
Dec. 17, 1952, “ Doc. 23, 1952 . 6 “
Feb. 23, 1953, “ May 29, 1953 .96 "

The hospitalization insurance policy which defendant had issued to the plaintiff contained the following provision.

“Daily Hospital Expense Indemnity
“If a dependent shall, by reason of illness or injury, be necessarily confined as a bed patient 18 hours or more within a licensed or incorporated hospital on the order of a legally qualified physician, the Association will pay the Insured for the amount incurred by the dependent for room, board and general nursing services not to exceed $10.00 for each dependent per day for Seventy days in any one period of hospitalization beginning the first day of hospital confinement. If the daily .expense is less than the maximum benefit the difference will be used to extend maximum number of days that coverage is available, but in no case shall the total amount payable under this part exceed the rate per day multiplied by the maximum number of days provided. Intermittent periods of hospitalization during any one continuous disability or resulting from the same or related causes shall be considered as one period of hospitalization.”

This is the provision of the policy under which the plaintiff seeks to recover. It is conceded that defendant has paid the plaintiff in full for 70 days of hospitalization and the only question in the case is whether the deceased’s periods of hospitalization were separate and distinct or whether under terms of the policy they must be considered as one period because they were intermittent periods resulting from the same or related causes.

In this connection, plaintiff contends that the hospitalization in December 1951 and in January, 1952, was because of an intestinal obstruction and that the hospitalization in December 1952 and from February to May 1953 was because of carcinoma and that the intermittent periods of hospitalization resulted from separate causes and not from the same or related causes. He argues that he has a right to rely on the preliminary diagnosis made by his wife’s physicians and that because the physicians did not report the discovery of carcinoma until after the deceased had been discharged from the hospital the first time, its existence must be considered to have begun at the time it was reported and not at the time it was discovered or at any other time.

As we view it, this argument is not even plausible. The terms of the policy are clear and unambiguous. They provide that intermittent periods of hospitalization resulting from the same or related causes shall be considered as one period. From the evidence in this case it is clear, beyond any doubt, that all of deceased’s hospitalization was due to carcinoma1 or to causes which were directly related to and produced by the carcinoma. The intermittent periods of hospitalization must therefore under the terms of the policy be considered as one period. Under the policy the maximum indemnity for one period is limited to $10 a day for seventy days. Defendant has paid this indemnity and thus discharged its liability under the policy. The judgment of the district court is therefore reversed and the case remanded to the district court for the entry of judgment dismissing the action.

MORRIS, SATURE, JOHNSON and GRIMSON, JJ., concur.

On Petition for Rehearing.

BURKE, Chief Justice.

Plaintiff has filed a petition for rehearing in which he points out that the court, in the opinion filed in this case, failed to consider the question of whether the testimony of the physician, who testified on behalf of the defendant, disclosed information acquired in attending a patient, and therefore should have been excluded as privileged. While this question was not argued in the brief of the plaintiff, a supplemental list of citations relating to the question was filed with the court.

As has been pointed out in the opinion filed, the sole question of fact in the case, was whether the several periods of hospitalization of plaintiff’s wife resulted from the same or related causes.

Proofs of claim, which had been presented ‘by the plaintiff to the defendant were received in evidence. By the terms of the contract of insurance these proofs were required to contain a statement of the nature of the disease or injury which caused plaintiff’s dependent’s hospitalization. Accordingly, these proofs of claim contained a physician’s certificate as to the cause of hospitalization, which was agreed to by the insured over his signature. These proofs show that all four periods of hospitalization of plaintiff’s dependent resulted from the same or related causes. Plaintiff offered no evidence whatever with respect to the cause of his dependent’s hospitalization, nor did he in any other way attempt to prove that the cause of any period of hospitalization, as stated in the proofs of claim, was incorrect. “Such proofs, * * * are regarded as admissions on the part of the plaintiff, provided they were furnished by or on his behalf, and may be introduced in evidence against him by the company for the purpose of showing the facts therein stated * * 46 C.J.S., Insurance, § 1337, pp. 482, 483. Such proofs are prima facie evidence of their contents. Metropolitan Life Ins. Co. v. Lanigan, 74 Colo. 386, 222 P. 402; Gill v. Modern Woodmen, 221 Ill.App. 388; Mexicott v. Prudential Ins. Co., 263 Mich. 420, 248 N.W. 856; Elness v. Prudential Ins. Co., 190 Minn. 169, 251 N.W. 183; Melton v. Royal Highlanders, 194 Iowa 352, 189 N.W. 787. And such proofs are, if unrcbutted, unexplained or unqualified by other evidence tending to show that they are erroneous or untrue, binding and conclusive upon the plaintiff. 29 Am.Jur. (Insurance, Sec. 1489) 1116. See also National Life & Accident Ins. Co. v. Puckett, 217 Ala. 110, 115 So. 12; Smiley v. John Hancock Mut. Life Ins. Co., Mo.App., 52 S.W.2d 12; American National Ins. Co. v. Anderson, 42 Ga.App. 624, 157 S.E. 112.

It appears therefore that even if all of the testimony of the attending physician were excluded from the evidence in the case the remaining evidence would still be conclusive as against the plaintiff. The admission of the physician’s testimony was therefore not prejudicial and it is unnecessary for us to consider whether it was error to. admit it.

Petition for rehearing is therefore denied.

MORRIS, SATHRE, JOHNSON and GRIMSON, JJ., concur.