131 Lab.Cas. P 58,055
Mary Jo NICHOLS, Plaintiff-Appellant,
v.
METROPOLITAN CENTER FOR INDEPENDENT LIVING, INC.; John
Walsh, individually and as Executive Director of
Metropolitan Center for Independent
Living, Inc., Defendants-Appellees.
No. 94-2054.
United States Court of Appeals,
Eighth Circuit.
Submitted Nov. 14, 1994.
Decided March 14, 1995.
Karla Wahl, Minneapolis, MN, argued, for appellant.
William Gengler, Minneapolis, MN, argued, for appellees.
Before MAGILL, Circuit Judge, JOHN R. GIBSON, Senior Circuit Judge, and LOKEN, Circuit Judge.
LOKEN, Circuit Judge.
Mary Jo Nichols commenced this action in state court, alleging that the Metropolitan Center for Independent Living ("MCIL") and John Walsh, MCIL's executive director, violated 42 U.S.C. Sec. 1983, the Minnesota Constitutiоn, and two Minnesota "whistleblower" statutes in terminating Nichols's employ with MCIL. After removal, the district court1 granted summary judgment for defendants, concluding that the Sec. 1983 and constitutional claims fail because MCIL is not a state actor, and that Nichols fаiled to present a prima facie case of unlawful retaliation under the whistleblower statutes. Nichols appeals. We affirm.
I.
The federal government makes funds available to the States to fund "centers for independent living" which рrovide independent living services to handicapped persons. See 29 U.S.C. Secs. 796-7961. Under that program, the State of Minnesota grants certificates to nonprofit corporations that qualify as centers for independent living. Minnesоta then provides federal and state funding to certificated centers and regulates certificate holders to ensure that they remain eligible for that funding. See Minn.Stat. Sec. 268A.11; Minn.Rules Secs. 3300.3100-.3270 (1993).
MCIL is a private corporation located in St. Paul, Minnesota, and organized under the Minnesota Nonprofit Corporation Act. See Minn.Stat. ch. 317. MCIL was one of three centers for independent living established in Minnesota in 1981 to provide independent living services to persons with disabilities. In 1992, 98% of MCIL's revenues came from federal and state funding. To remain certificated and eligible for that funding, MCIL must comply with Minn.Stat. Sec. 268A.11 and its implementing rules.
From 1986 until her termination in 1992, Nichols was MCIL's Support Services Coordinator. Though her formal job description was broader, Nichols's primary focus was assuring that public transportation is provided to individuals with disabilities in the Twin Cities metropolitan area. Nichols served on the Transit Accessibility Advisory Committee to the Regional Transit Board.
In November 1991, MCIL's Board of Directors adopted a new Long Range Plan. The Board's intent was, as one member averred, "to redesign [MCIL's] approach to the community, focusing more on consumer empowerment and consumer involvement in issues." In more рractical terms, Executive Director Walsh told Nichols that, in implementing the Plan, MCIL would reduce its transportation services and eliminate her position, and that she must resign from the transit advisory committee. Nichols strenuously protested thesе changes, first informally and then by a formal grievance to the Board of Directors. Nichols argued that the reduction in transportation services would result in MCIL losing its government funding and certification. The Board rejected her grievance аnd upheld Walsh's decisions.
Having eliminated her prior position, Walsh offered Nichols a new position at the same salary. When Nichols refused, Walsh terminated her employ, and the MCIL Board rejected her second grievance prоtesting the termination.2 Nichols complained to the Minnesota Department of Jobs and Training, which investigated and "found the Center's actions in this matter to be consistent" with its responsibility "to make program service and personnel decisiоns within the requirement of Federal and State law, rules ... and [its] contracts with the Division of Rehabilitation Services."
Nichols then commenced this action. She alleged violations of her liberty interest and due process rights under Sec. 1983 and the Minnesota Constitution. She further alleged that defendants violated two Minnesota whistleblower statutes, Minn.Stat. Secs. 181.932 and 181.933, by firing Nichols because she opposed conduct which she believed to be unlawful, and by not giving her a written statement of reasons for the termination. Nichols now appeals the grant of summary judgment dismissing these claims.
II.
Nichols's primary contention on appeal is that the district court erred in dismissing her whistleblower retaliation claim. The relevant statute provides:
An emplоyer shall not discharge ... an employee ... because (a) the employee ... in good faith, reports a violation or suspected violation of any federal or state law or rule adopted pursuant to law to an employer or to any governmental body or law enforcement official; ... [or because] (c) the employee refuses an employer's order to perform an action that the employee has an objective basis in fact to believe violates any state or federal law or rule or regulation adopted pursuant to law and the employee informs the employer that the order is being refused for that reason.
Minn.Stat. Sec. 181.932, subd. 1. The Minnesota courts apply the familiar three-part McDonnell Douglas analysis in resolving claims of retaliatory discharge under Sec. 181.932. See McGrath v. TCF Bank Savings,
Under Minnesota law, a prima facie case of retaliatory discharge requires proof of "(1) statutorily-protected conduct by the employee; (2) adversе employment action by the employer; and (3) a causal connection between the two." Hubbard v. United Press Int'l, Inc.,
Nichоls argues that she satisfies this element of the prima facie case because of her good faith belief that MCIL was proposing to violate its "legal obligation to provide transportation referral and assistance services." More specifically, in her amended affidavit opposing defendants' motion for summary judgment, Nichols averred:
I understood that MCIL had a statutory mandate to provide services in the area of public transportation for the disabled. I also understood that in order for MCIL to continue to be certified and to receive public funding, it was required to provide certain advocacy assistance to disabled consumers regarding their public transit opinions.... I believed that the changes which Mr. Walsh indicated were going to occur, were contrary to the statutory mandate and violative of both federal and state law.... After I voiced my objections to the fundamental changes in services which I believe are required by both federal and state statu[t]e and are necessary to be provided in order to receive the full compl[e]ment of funding, I was told that my position was going to be changed and that I was being demoted....
The statutory "mandate" to which Nichols refers is the Minnesota statute which defines "independent living services" to include "housing and transportation referral and assistance," Minn.Stat. Sec. 268A.11, subd. 1(5), and the regulation which provides that, to obtain and maintain a certificate, a center for independent living "must at a minimum provide ... (4) housing and transportation referral and assistance," Minn.R. Sec. 3300.3200, subp. 2.G. (4).3 This is not a mandate in the penal or regulatory sense of the word. It is a condition, indeed, a most generаl and open-ended condition, that MCIL must satisfy to maintain its status as a certificated center for independent living that is eligible for government funding. Nichols's whistleblower claim founders on this essential distinction.
Nichols urged MCIL not to take action that she believed would jeopardize its eligibility for public funding. An employer that takes action causing it to lose a government grant, loan, contract, or other benefit does not break the law.4 Thus, however well-intentioned, Nichols's complаint concerned a change in MCIL's management policies, not a "violation of law" within the meaning of Sec. 181.932. The whistleblower statute is intended to protect the public from unlawful employer conduct; "[t]he public does not have an interest in a business's internal management problems." Vonch v. Carlson Cos.,
Finally, Nichols argues that MCIL violated Minn.Stat. Sec. 181.933 by failing to provide her with a written explanation of the reasons for her termination. However, an employer is only liable under Sec. 181.933 to "an employee injured by a violation of section 181.932." Minn.Stat. Sec. 181.935. Because Nichols failed to prove that MCIL violated Sec. 181.932, the district court properly granted summary judgment dismissing her claim under Sec. 181.933.
III.
Nichols also argues that the district court erred in dismissing her claims under Sec. 1983 and the Minnesota Constitution. Both of these claims require proof that the termination of Nichols's employment was "fairly attributable to the State," that is, in this context, that "the party charged with the deprivation [was] a person who may fairly be said to be a state actor." Lugar v. Edmоndson Oil Co.,
In our view, this issue is controlled by Rendell-Baker v. Kohn,
Nichols argues that MCIL is a state actor because it depends upon government for nearly all its funding; becаuse it performs uniquely public functions; and because it is subject to extensive governmental regulation and licensing, including a requirement that over one-half of its Board members be disabled persons, or spouses or parents of disabled persons. However, all of these factors were present, perhaps to an even greater degree, in Rendell-Baker. What was missing here and in Rendell-Baker, and what was present in McVarish v. Mid-Nebraska Community Mental Health Ctr.,
The judgment of the district court is affirmed.
Notes
The HONORABLE RICHARD H. KYLE, United States District Judge for the District of Minnesota
There are fact disputes between the parties concerning the events immediately preceding Nichols's termination, but they are not material to the issues that govern this appeal
The federal statute does not require a center for indеpendent living to provide transportation services to be eligible for federal funding. See 29 U.S.C. Secs. 796f-4(b)(5); 706(30)(B)(xi)
On the other hand, an employer that dishonestly obtains or retains a government-bestowed benefit, for example, by submitting a false report or misleading a government official, in most cases is breaking the law. Nichols makes no such allegation