Paul H. Grinde, Ryan & Grinde, Ltd., 407 14th Street NW, P.O. Box 6667, Rochester, MN 55903-6667 (for Appellants)

Roger M. Stahl, Dingle & Wendland, Ltd., Suite 300 Norwest Center, P.O. Box 939, Rochester, MN 55903-0939 (for Respondents)

Considered and decided by Peterson, Presiding Judge, Norton, Judge, and Willis, Judge.

Appellants Joy Oman and Nancy Gamon challenge the district court's determinations that (1) respondents Ronald Hodge and Ranfranz Funeral Home, Inc. (Ranfranz), did not discriminate against them in their work opportunities or their terminations; (2) appellants did not establish an equal pay claim under Minn. Stat. § 181.67; (3) appellants' work environment was not so abusive or hostile as to alter a term, condition, or privilege of employment, and (4) part of the testimony of one of appellants' witnesses was hearsay. Respondents challenge the district court's denial of costs and disbursements. We affirm in part, reverse in part, and remand.

In April 1992, soon after receiving her license as a funeral director, Gamon began working at Ranfranz, with the same six-month probationary period as all other permanent employees. At the time of her hiring, Hodge did not inform Gamon about the profit-sharing plan, for which Ranfranz employees were eligible after one year of service. Otherwise, Hodge made Gamon aware of all of the benefits that accompanied her job.

Upon her licensure as a funeral director, Hodge gave Oman a raise to $10 per hour, or approximately $20,800 annually, which was her pay when she left in August 1992. Hansen returned from college in September 1992, was hired as an apprentice, and started at an annual salary of $22,000. After a six-month probationary period, Hodge increased Hansen's salary to $24,000, although he was still an apprentice. When he received his funeral director license, Hansen's salary was increased to $27,000.

Gamon's annual salary was $24,000. Respondents paid a funeral director hired during Gamon's tenure $10,000 more than Gamon and paid Gamon's replacement $13,000 more than Gamon. But these two licensed funeral directors, who were both men, had six and eleven years of experience, respectively.

Hodge did not allow Oman to make funeral arrangements because he did not "feel comfortable with her making arrangements." Gamon was asked to make funeral arrangements on two occasions, but in both instances Gamon was hesitant to do so and the arrangements were ultimately made by a male employee. Hodge did not place Oman on the on-call schedule to transport corpses to Ranfranz, but he placed Gamon on the schedule the day she was hired.

Oman claimed that upon giving her a raise, Hodge "said that he wanted to keep [her] on," but although two permanent positions became available, she was told that she would not be considered for either job. Hodge testified that he wished he could retain Oman, but said that Hansen would be coming back for the position Oman held and that he wanted to fill the other two positions with more experienced funeral directors.

In July 1992, Hodge informed Gamon that her employment would be terminated on October 31, 1992. Hodge testified that after he hired Gamon, (1) she began to appear depressed, unhappy, and introverted, and (2) he received reports that she would not take the initiative required by her job to facilitate funerals. Hodge replaced Gamon with a male funeral director with several years' more experience.

Ranfranz had no sexual harassment policies in place during Oman and Gamon's terms of employment. While Oman and Gamon were employed at Ranfranz (1) Ranfranz employees told sexual jokes to each other regularly, (2) an employee left an allegedly sexually explicit drawing in public view, (3) comments regarding oral sex were made to Oman, (4) Oman was asked about her personal life with her husband, (5) a note was addressed to Oman and Gamon as "women," (6) derogatory statements about women were made in their presence, (7) references were made to them as "girls" and "gals," and (8) one employee said that Gamon was "cute."

Appellants separately sued respondents, alleging sexual discrimination, wage discrimination, and sexual harassment. The district court consolidated the cases for trial and entered judgment in favor of respondents in both cases. Appellants separately moved for amended findings and new trials, and respondents moved for costs and disbursements. The district court issued two orders making additional findings, denying new trials, and denying costs and disbursements. These appeals followed and were consolidated.

I.

Respondents assert that appellants failed to raise the issues in this appeal with specificity in their motions for new trials. This court must affirm a district court's denial of a motion for a new trial if the motion for a new trial fails "to identify any specific grounds which would justify a new trial." Waldner v. Peterson, 447 N.W.2d 217, 219 (Minn. App. 1989). In their motions, appellants specifically alleged error and cited cases supporting their allegations. We conclude that appellants assigned error with sufficient specificity.

Respondents next claim the wage discrimination arguments advanced in this appeal are not reviewable because they were raised for the first time in appellants' briefs to this court. See Thiele v. Stich, 425 N.W.2d 580, 582 (Minn. 1988) (holding that a reviewing court may only consider issues presented to and considered by the district court). The district court originally found the equal pay claim under Minn. Stat. § 181.67 (1996) untimely because appellants raised the issue for the first time on the morning of the trial. In its orders denying new trials, however, the district court considered and denied the equal pay claims. Because the wage discrimination arguments were presented to and considered by the district court, they are properly before this court.

The Minnesota Supreme Court has adopted the three-part test, established by the United States Supreme Court in McDonnell Douglas Corp. v. Green, 411 U.S. 792, 93 S. Ct. 1817 (1973), for analyzing discrimination claims brought under the Minnesota Human Rights Act. Danz v. Jones, 263 N.W.2d 395, 399 (Minn. 1978). Under this test, the plaintiff has the burden of proof to establish a prima facie case of discrimination. Id. When the plaintiff establishes a prima facie case, the evidentiary burden shifts to the defendant to show that there was a legitimate, nondiscriminatory reason for its action. Id. The burden then shifts back to the plaintiff to show by a preponderance of the evidence that the defendant's proffered reason is pretextual. Id.

The district court found that appellants had made a prima facie case of discrimination, but that respondents provided nonpretextual reasons for the disparities in work opportunities and compensation and for the terminations. Appellants argue that the district court's conclusion that they were not victims of sexual discrimination in work opportunities, compensation, or termination was clearly erroneous because respondents' reasons for the disparities were pretextual.[1]

The district court found that: (1) Oman's opportunities as an apprentice were not more limited than other apprentices, (2) it was a legitimate business decision for Ranfranz to place more experienced employees than Oman in contact with customers, (3) Gamon did not present any evidence that she was ever precluded from making or observing funeral arrangements, (4) Gamon's reluctance to meet with bereaved families was a legitimate, nondiscriminatory reason for respondents to choose not to have her make funeral arrangements, (5) the two male funeral directors who were paid more than Gamon had significantly more experience than she, (6) Hansen had three years more experience working at Ranfranz than did Oman, (7) Hodge terminated Gamon because she was not performing satisfactorily and because he wanted to hire more experienced funeral directors, and (8) Oman was hired on a temporary basis and Hodge at all times expected to replace her with more experienced help.

Because the record does not show that respondent's justifications for the disparities in work opportunities and compensation and for the terminations were pretextual or unworthy of belief, the district court did not err in concluding that appellants were not discriminated against with respect to work opportunities, compensation, and termination.

The district court concluded that any wage discrepancy between appellants and male employees was based on personal or industry experience and job duties. Wage discrepancies are not unlawful under section 181.67 if they are based on any factor other than sex. Id., subd. 1. The three-part McDonnell Douglas test is applied to wage discrimination claims brought under Minn. Stat. § 181.67. Kolstad v. Fairway Foods, Inc., 457 N.W.2d 728, 734 (Minn. App. 1990). The record supports the district court's conclusion that respondents' reasons for the wage discrepancies were legitimate and that appellants did not show the reasons were pretextual. The district court therefore did not err by denying appellants' wage discrimination claims.

The district court found appellants were members of a protected group and were subject to unwelcome sexual harassment in the form of sexual innuendo, jokes, and a drawing that could have been perceived as sexually explicit. However, the court denied their claim because the harassment was not so severe as to affect the terms, conditions, or privileges of employment. See Meritor Savs. Bank v. Vinson, 477 U.S. 57, 67, 106 S. Ct. 2399, 2405 (1986) (concluding that harassment affects a term, condition, or privilege of employment only if the conduct is so severe that it creates an abusive working environment).

Appellants argue that the district court erred in denying their sexual harassment claim by (1) requiring that appellants show that they complained to respondents in order to state claims for sexual harassment and (2) failing to find that the evidence supported appellants' claims that they were subject to a hostile work environment that altered a term, condition, or privilege of employment.

We find that the district court did not err because (1) it only used appellants' failure to complain to their manager as circumstantial evidence that the conduct was not offensive to appellants and (2) there was ample evidence for the district court to find that appellants were not subject to harassment that affected a term, condition, or privilege of their employment.

At trial, Schmid stated that the Czaplewski's testimony was inconsistent with a telephone conversation she had with him, and she began to describe the conversation, in which Czaplewski had told her that off-color jokes were told at Ranfranz. Respondent's attorney made a hearsay objection, and appellants' attorney argued that the prior inconsistent statement exception applied. The court sustained the objection and did not allow Schmid to testify to the employee's statements.

Extrinsic evidence of a prior inconsistent statement by a witness is not admissible unless the person who made the statement is afforded a prior opportunity to explain or deny the statement. Minn. R. Evid. 613(b). Czaplewski admitted during cross-examination that he had spoken to Schmid, but denied having told her that off-color jokes were told at Ranfranz. Because Czaplewski was given an opportunity to address his prior inconsistent statement, Schmid's testimony should have been allowed. Moreover, if Czaplewski was acting as a representative of his employer during his conversation with Schmid, his statements were admissible as an admission by a party-opponent under Minn. R. Evid. 801(d)(2). The district court abused its discretion by not allowing Schmid to testify to her conversation with Czaplewski.

Even if a district court abuses its discretion in an evidentiary ruling, however, this court will not grant a new trial unless the complaining party was prejudiced by the ruling. Lundman, 530 N.W.2d at 829. Despite the court's limitation, Schmid's testimony revealed that Ranfranz's employee had made an inconsistent statement. Moreover, James Arendt, a former Ranfranz employee, testified that sexual remarks, sexual innuendo, and sexual jokes were common at Ranfranz. Based on the record, even if Schmid had testified to the full conversation, the evidence would not have compelled a finding of sexual harassment. The district court's exclusion of Schmid's testimony was, therefore, not prejudicial.

Here, the district court made no findings that respondents' claimed costs were unreasonable, but denied costs and disbursements to the prevailing party. We therefore reverse and remand for (1) findings on respondents' reasonable costs and disbursements and (2) based on those findings, an award of costs and disbursements to respondents.

Affirmed in part, reversed in part, and remanded.

[ ]¹Appellants also assert that the district court "applied the wrong burden of proof" by requiring them to prove discrimination to satisfy their burden under the third prong of the McDonnell Douglas test. The district court, however, applied the proper standard in determining whether appellants had shown the reasons were pretextual, citing Ward v. Employee Dev. Corp., 516 N.W.2d 198, 202 (Minn. App. 1994) (noting that where defendant sets forth a legitimate nondiscriminatory basis for the disputed conduct, plaintiff must show that the proffered reasons "are a pretext for discrimination or are not worthy of belief"), review denied (Minn. July 8, 1994).