This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. §. 480A.08, subd. 3 (1994).

STATE OF MINNESOTA

IN COURT OF APPEALS

C6-96-826

Jacqueline Martha Schlitz,

Appellant,

vs.

Holiday Companies,

Respondent,

Hemchand Ramroop,

Respondent.

Filed November 12, 1996

Affirmed in part, reversed in part, and remanded

Foley, Judge

[*]

Hennepin County District Court

File No. 94-10931

Joseph A. Rymanowski, Jr., P.O. Box 385937, Bloomington, MN 55438-5937 (For Appellant)

David J. Lauth, Mary B. Thomas, Dorsey & Whitney, Pillsbury Center South, 220 South Sixth Street, Suite 1300, Minneapolis, MN 55402 (For Respondent Holiday Companies)

Joel C. Golden, 3800 West 80th Street, Suite 1100, Bloomington, MN 55431 (for Respondent Ramroop)

Considered and decided by Amundson, Presiding Judge, Toussaint, Chief Judge, and Foley, Judge.

U N P U B L I S H E D O P I N I O N

FOLEY, Judge

Appellant Jacqueline Schlitz challenges the district court's (1) grant of summary judgment to respondent Holiday Companies, Inc. (Holiday), (2) denial of her motion to amend her complaint to include punitive damages, and (3) order compelling her to settle all remaining claims with respondent Hemchand Ramroop. Because we find no error in the trial court's determinations regarding the grant of summary judgment and denial of the motion to amend the complaint, we affirm. However, because we find that there is no reasonable basis to support the trial court's order compelling settlement, we reverse and remand on that issue for further hearings.

FACTS

Jacqueline Schlitz and Hemchand Ramroop were employed as data processors by Holiday. Schlitz and Ramroop worked the night shift together and were usually the only employees on the premises. The two became friends and would take breaks together, bet on football games, and occasionally dress alike for work.

Schlitz alleges that beginning in January 1993, Ramroop began sexually assaulting her at work, subjecting her to threats of violence and poor job reviews if she did not submit to him.

In March 1993, Schlitz reported the alleged assaults to her supervisor, Wendy Larson, who, against Schlitz's wishes, reported the matter to personnel. Holiday immediately suspended Ramroop without pay, pending an investigation. An internal investigation led Holiday to believe that Schlitz had engaged in consensual sex with Ramroop. Holiday terminated Ramroop and suspended Schlitz, without pay, pending the outcome of a criminal investigation of her complaints against Ramroop. The Hennepin County Attorney's Office declined to file criminal charges against Ramroop due to insufficient evidence.

Schlitz filed this personal injury suit against both Ramroop and Holiday. After completion of discovery, Holiday moved for summary judgment dismissing all claims against it, including counts one through three of Schlitz's complaint brought under the Human Rights Act. The court granted Holiday's motion and denied Schlitz's motion to amend her complaint. The court also dismissed several tort claims against Ramroop except intentional infliction of emotional distress, negligent infliction of emotional distress, assault, battery, sexual assault, and sexual battery.

Schlitz, Ramroop, and their respective attorneys, Priscilla Faris and Joel Golden, reached a tentative settlement agreement regarding the remaining claims. The matter remained on the calendar until the morning of the trial. Faris informed the trial court that Schlitz and Ramroop had settled and a trial was not necessary. However, after repeated attempts to get the documents signed, Ramroop brought a motion to compel settlement. Schlitz's attorney filed a notice of withdrawal the same day. Schlitz appeared pro se at a hearing on November 30, 1995 regarding the matter. Schlitz claimed Faris did not have authorization to settle with Ramroop. Schlitz stated that she was unable to respond to Golden because Faris refused to give Schlitz her file. She also stated she was having problems retaining another attorney.

The trial court found Schlitz's reasons for not conforming to the settlement invalid, and ordered her to execute the settlement documents presented by Golden. When Schlitz did not do so, the trial court dismissed the claims with prejudice.

Schlitz appeals the issues of whether Holiday was entitled to summary judgment on the above-mentioned claims, whether she was entitled to amend her claim to include punitive damages, whether she should have been compelled to settle with Ramroop, and when she did not, whether the dismissal was properly entered.

Because Schlitz later dismissed her tort claims against Holiday, the merit of those claims need not be addressed. Schlitz retained only the Human Rights Act and Whistleblower claims against Holiday, which the trial court dismissed by summary judgment.

ISSUES

I. Did the trial court err in granting respondent Holiday's motion for summary judgment against Schlitz regarding the Human Rights Act and Whistleblower claims?

II. Did the trial court err in denying Schlitz's motion to amend her complaint to include punitive damages?

III. Did the trial court err by compelling Schlitz to settle her remaining claims with Ramroop and subsequently dismissing those claims with prejudice?

ANALYSIS

I.

On appeal, this court must ask (1) whether there are any genuine issues of material fact, and (2) whether the lower court erred in its application of the law. State by Cooper v. French, 460 N.W.2d 2, 4 (Minn. 1990); see Admiral Merchants v. O'Connor & Hannan, 494 N.W.2d 261, 265 (Minn. 1992). The court must view the evidence in the light most favorable to the party against whom judgment was granted. Fabio v. Bellomo, 504 N.W. 2d 758, 761 (Minn. 1993). The nonmoving party "may not rest upon the mere averments or denials of [its] pleading, but must present specific facts showing that there is a genuine issue for trial." Minn. R. Civ. P. 56.05. Summary judgment should be denied if reasonable people could draw different conclusions from the evidence presented. Illinois Farmers Ins. Co. v. Tapemark Co., 273 N.W.2d 630, 633 (Minn. 1978) (citing Anderson v. Twin City Rapid Transit Co., 250 Minn. 167, 186 84 N.W.2d 593, 595 (1957)).

A. Sexual Harassment

Schlitz argues that Holiday violated the Minnesota Human Rights Act (the Act), which holds an employer liable to an employee for incidents of sexual harassment if the company "knows or should know of the existence of the harassment and fails to take timely and appropriate action." Minn. Stat. § 363.01, subd. 41(3) (1994).

The trial court found that Schlitz failed to make out a prima facie case proving that Holiday knew or should have known about the alleged attacks by Ramroop. No facts indicated that Holiday had notice of Ramroop's behavior and failed to respond. Further, no facts indicate that Ramroop's behavior was reasonably foreseeable by Holiday. Schlitz did not allege that Ramroop had committed prior acts of violence in the workplace before her allegations.

Schlitz alleges that the "inadequate security" provided by Holiday at the facility in which she worked made her alleged attack by Ramroop reasonably foreseeable to Holiday. However, Schlitz fails to make a plausible connection between her alleged attacks by her co-worker and the inadequate security on the premises where she worked. Schlitz merely states that the fact that she and Ramroop worked late hours alone should have put Holiday on notice of Ramroop's impending attacks. Schlitz also recounts a fellow employee's rape on the premises by a co-worker as proof of Holiday's prior knowledge. The previous attack, however, was not by Ramroop and has no connection to Ramroop's or Schlitz's situation.

Schlitz also states that she received obscene phone calls four months prior to the first alleged incident by Ramroop, thereby putting Holiday on notice of sexual harassment directed toward her. Schlitz immediately notified her manager about the calls and a trace was placed on her phone. No one was identified as the perpetrator and the calls stopped a short time later. Schlitz argues that no one at Holiday spoke with her again regarding the calls. This event is not sufficient to constitute knowledge by Holiday that Schlitz was being sexually harassed.

Schlitz claims that Ramroop was her "de facto" supervisor. In McNabb v. Cub Foods, 352 N.W.2d 378, 383 (Minn. 1984), the court found a lower level employee's knowledge of harassment imputed to the employer. Relying on McNabb, Schlitz claims that Holiday's knowledge was imputed through Ramroop. McNabb may be distinguished from this case because the lower level employee actually exercised some managerial authority and provided a "link" to upper management. Id. at 383. Thus, the supreme court found that the employee's requests for help to the lower level manager imputed knowledge to the company as a whole. Id. Here, Schlitz did not tell anyone of the alleged harassment until after it had begun, at which time she notified her supervisor, Wendy Larson, who took appropriate action.

Schlitz also cites Tretter v. Liquipak Int'l, Inc., 356 N.W.2d 713 (Minn. App. 1984) in support of her case. In Tretter, the victim's supervisor inflicted the harassment, and this court imputed knowledge to the company as a result. Id. at 715. Tretter may also be distinguished from this case, however, because the supervisor sexually harassed other female employees, and the harassment was common knowledge around the office. Id. Further, the victim repeatedly asked her supervisor to stop the harassment, stating that it was offensive. Finally, another employee informed the president and the personnel director of the company. This court found the company knew or should have known of the harassment. Id.

There are no facts here to indicate that others in the department knew of Ramroop's alleged behavior, nor were there any complaints from other female employees regarding Ramroop. Finally, upon hearing Schlitz's allegations, Holiday immediately suspended Ramroop pending an investigation.

There are no facts to indicate that Ramroop was Schlitz's "de facto" supervisor. Minn. Stat. § 179A.03, subd. 17 (1994) defines a "supervisory employee" as one who

has the authority to undertake a majority of the following supervisory functions in the interests of the employer: hiring, transfer, suspension, promotion, discharge, assignment, reward, or discipline of other employees, direction of the work of other employees, or adjustment of other employees' grievances on behalf of the employer. To be included as a supervisory function which the person has authority to undertake, the exercise of the authority by the person may not be merely routine or clerical in nature but must require the use of independent judgment.

Ramroop was not involved in Schlitz's hiring, performance evaluations, scheduling, promotions, or discipline. In fact, one employee stated that Ramroop was not Schlitz's boss "in any way, shape, or form." Schlitz argues that because Ramroop told her what to do when they worked together, knew the company agenda before the rest of the department, and controlled the department meetings, he was her supervisor. This is not sufficient to satisfy the statutory definition.

Even if Ramroop were Schlitz's supervisor and knowledge were imputed, Holiday may not be held liable unless it failed to take timely and appropriate action. See Minn. Stat. § 363.01, subd. 41(3). Timely and appropriate action has included (1) dissemination of an anti-harassment policy, (2) transferring the employee to another shift, and/or (3) taking or threatening disciplinary action against offending employees. See McNabb, 352 N.W.2d at 384 (citing Continental Can Co., Inc. v. State, 297 N.W.2d 241, 248 (Minn. 1980)). Holiday immediately suspended Ramroop during the investigation of Schlitz's claim. Once Holiday determined that sexual activity had occurred (albeit, consensual), it terminated Ramroop, satisfying the standard set out in McNabb. Holiday did not have prior knowledge of the alleged harassment, and once aware of it, Holiday took timely and appropriate action.

Minn. Stat. § 363.03, subd. 6(1) (1994) makes it unlawful for an employer "[i]ntentionally to aid, abet, incite, compel, or coerce a person to engage in any practices forbidden by this chapter." Schlitz argues that Holiday violated this section by providing an unsafe workplace with little or no security, thus aiding Ramroop in his harassment of her. Schlitz states that by allowing a male and a female to work alone late at night, Holiday was condoning Ramroop's alleged behavior. There are no facts to indicate that Holiday aided Ramroop in harassing Schlitz by scheduling them to work nights together without a security guard on the premises. Holiday had no prior information that would lead it to suspect that Ramroop would assault Schlitz. If a male and female employee working a night shift together without a security guard on the premises constituted aiding and abetting under the statute, no male or female employee could work together at any company at night without a security guard. Further, there are no facts to indicate that if a security guard had been on duty, the alleged harassment would not have occurred.

B. Retaliation

Schlitz argues that she was terminated because she complained of harassment. She alleges Holiday violated Minn. Stat. SSSS 181.932, subd. 1 (1994) (whistleblower) and 363.03, subd. 7 (1994) (Human Rights Act), which prohibit an employer from retaliating against an employee who, in good faith, reports a violation or suspected violation of any federal or state law to an employer, or a discriminatory practice. The trial court did not find material issues in dispute with regard to Schlitz's claim of retaliation.

To establish a prima facie case for retaliation under the Act, an employee must show (1) statutorily protected conduct by the employee, (2) adverse employment action by the employer, and (3) a causal connection between the two. Hubbard v. United Press Int'l, Inc., 330 N.W.2d 428, 444 (Minn. 1983) (citing Womack v. Munson, 619 F.2d 1292, 1296 (8th Cir. 1980), cert. denied, 450 U.S. 979 (1981)). A causal connection may be demonstrated indirectly by showing the employer had knowledge of the protected activity and the adverse employment action followed closely in time. Hubbard, 330 N.W.2d at 445. Once a prima facie case is established by the employee, the burden falls on the employer to show a nondiscriminatory reason for the adverse employment action. Id. at 443. If established, the burden falls on the employee to prove that the employer's reason is pretextual. Id.

Schlitz argues that she filed a complaint against Ramroop with her manager and was fired two weeks later. Schlitz has laid out a prima facie case under Hubbard. However, Holiday rebuts this by contending that while it did eventually fire Schlitz, the termination occurred only after an investigation and a determination that the sexual activity was consensual. While investigating, Holiday informed Schlitz she was entitled to paid leave. Holiday also claims it offered her counseling. Once Holiday determined the activity was consensual, it agreed not to terminate Schlitz pending the outcome of criminal charges against Ramroop. During this time, however, Schlitz was prohibited from working and did not receive pay or benefits. Schlitz provides no other evidence to prove that Holiday's actions in terminating her were a pretext for retaliation. Thus, no facts exist to create a material issue as to whether Holiday retaliated against Schlitz.

II.

Whether to allow an amendment to include punitive damages is committed to the trial court's discretion. Utech v. Shopko Dep't Store, 324 N.W.2d 652, 654 (Minn. 1982). Denial of a motion to add a claim for punitive damages may be reviewed on appeal from a final judgment. See Metag v. K-Mart Corp., 385 N.W.2d 864 (Minn. App. 1986). This court will only reverse if there is a clear abuse of that discretion. LaSalle Cartage Co., Inc. v. Johnson Bros. Wholesale Liquor Co., 302 Minn. 351, 358, 225 N.W.2d 233, 238 (Minn. 1974) (citing Dale v. Pushor, 246 Minn 254, 261, 75 N.W.2d 595, 601 (1956)).

In a civil action, punitive damages are prohibited in the original complaint. Minn. Stat. § 549.191 (1994). After filing suit, a party may move to amend its pleadings to include punitive damages and provide the trial court, through affidavits, with a factual basis for the damages. If the court finds that prima facie evidence supports the claim for punitive damages, it shall grant leave to amend. Id.

Punitive damages will be allowed only upon a showing of "clear and convincing evidence that the acts of the defendant show a willful disregard for the rights and safety of others." Minn. Stat. § 549.20, subd. 1(a) (1994).

A mere showing of negligence is not sufficient; instead, the conduct must be done with malicious, willful, or reckless disregard for the rights of others.

Admiral Merchants Motor Freight, Inc. v. O'Connor & Hannan, 494 N.W.2d 261, 268 (Minn. 1992) (citing Cobb v. Midwest Recovery Bureau Co., 295 N.W.2d 232, 237 (Minn. 1980)).

Schlitz argues that the trial court erred in denying her motion to amend her complaint to include punitive damages. The trial court stated that it denied Schlitz's motion because she did not meet the "clear and convincing" standard by demonstrating that Ramroop showed willful disregard for her rights and safety and because Ramroop lacked the resources to pay punitive damages.

Schlitz contends she was not required to meet the "clear and convincing" standard, but rather only to present prima facie evidence to support her claim. Further, she claims that the ability to pay punitive damages is a factor that the jury is to decide. Minn. Stat. § 549.20 does not specifically require that a jury decide these matters, and Schlitz provides no persuasive authority supporting these claims. The court determines if the issue of punitive damages is to be submitted to the jury, and the jury or trier of fact may, but is not compelled to, award such damages.

The trial court found that Schlitz did not meet the "clear and convincing" standard. It determined that Schlitz and Ramroop engaged in consensual sex and thus there was no evidence that Ramroop showed willful disregard for Schlitz's rights and safety. We believe that the trial court should have reserved its ruling on the issue until the close of evidence and then applied the clear and convincing standard. However, because there was no reversible error and the correct standard was applied, we find no abuse of discretion in denying Schlitz the opportunity to amend her complaint to include punitive damages against Ramroop and Holiday.

III.

In reviewing a trial court's order to enforce settlement, the appellate court will only consider whether there exists any reasonable basis in the record to support the order. The review of the record must be in the light most favorable to the plaintiff so as not to intermeddle with the discretionary power vested in the trial courts. Eggleston v. Keller Drug Co., 265 Minn. 78, 80, 120 N.W.2d 305, 306 (1963).

The trial court made no express findings of fact in granting the motion to enforce the settlement. However, express findings of fact are not necessary with respect to decisions on motions. Minn. R. Civ. P. 52.01.

Schlitz argues that the trial court erred when it compelled her to conform with the alleged settlement of her remaining claims against Ramroop. At the settlement hearing, the trial court stated that it believed the parties settled the matter properly, and whatever problems remained for Schlitz should be discussed with her attorney because they appeared to be financial and not issues for the court to decide.

Schlitz claims she did not give her attorney the authority to settle with Ramroop. Whether an attorney has been given express authority to settle a claim is a question of fact to be resolved by the trial court. Skalbech v. Agristor Leasing, 384 N.W.2d 209, 212 (Minn. App. 1986) (citations omitted). This court must determine whether there was sufficient evidence for the trial court to have found that Schlitz's attorney, Priscilla Faris, was authorized to settle. We hold there was not.

At the hearing, Schlitz appeared pro se and stated that she had not authorized her attorney to settle the case:

MS. SCHLITZ: At this moment right now I am here, Your Honor, to ask -- I am requesting a continuance. Right now Priscilla Lord Faris withdrew. That was a surprise to me. It's taken me about a month to find another attorney. I will be retaining that attorney on December 15th.

At that time, the attorney will have to prepare. Priscilla Lord Faris and I are not talking, and she will not give me my file. I spoke to Mr. Golden yesterday.

THE COURT: Ms. Golden -- I mean, Ms. Schlitz, I have nothing to do with what you are telling me at this time. The only -- the only purpose we are here is to find out why you won't settle it. And if it was settled and your attorney was authorized to settle it, it sounds like you talked about money, and I ask you how much money you are talking about, and you didn't answer me. So --

MS. SCHLITZ: My attorney was not authorized to settle this case, Your Honor.

THE COURT: The attorney must have been authorized to settle the case or the attorney would not have -- would not have done that. And if we went through a settlement proceeding, then it was done properly. Your attorney is an officer of this court.

Apparently you are having problems, financial problems, with your attorney. That's probably the only reason your attorney is not giving you the file, you are not paying her. So it sounds like it is something to do with money.

And I don't think that's a -- those reasons you are telling me is a valid reason why you shouldn't sign the settlement. You have other remedies to deal with it. And there's no real reason why I shouldn't compel you to sign this order.

To determine whether an attorney has authorization from a client,

[a] court, upon motion and hearing, and when reasonable grounds are shown, may require any attorney to prove the attorney's authority to appear and, until such proof is made, may stay all proceedings by the attorney on behalf of the party the attorney assumes to represent.

Minn. Stat. § 481.09 (1994). In this case, the trial court determined that Schlitz's case had been properly settled, although she adamantly denied providing her attorney with the authorization to do so. These are reasonable grounds requiring the attorney to prove authorization. We hold that a separate hearing is mandated to provide Schlitz the opportunity to call and cross-examine witnesses regarding the issue of authorization.

If the trial court at the close of the evidence finds that Faris was authorized to settle on behalf of Schlitz, the settlement is binding. "An attorney may bind a client, at any stage of an action or proceeding, by agreement * * * made in writing and signed by such attorney." Minn. Stat. § 481.08 (1994). However, a hearing is necessary to determine whether Faris had this authorization. Thus, we reverse and remand on this issue. The claims settled by the agreement shall be held in abeyance until the district court conducts a hearing on the settlement and determines that issue.

Affirmed in part, reversed in part, and remanded.

[ ]* Retired judge of the Minnesota Court of Appeals, serving by appointment pursuant to Minn. Const. art. VI, § 10.