1-1700-11597-2

STATE OF MINNESOTA

OFFICE OF ADMINISTRATIVE HEARINGS

FOR DEPARTMENT OF HUMAN RIGHTS

 

State of Minnesota by Janeen Rosas, Commissioner, Department of Human Rights Complainant, v. Distinctive Dental Services, P.A. Respondent.

FINDINGS OF FACT, CONCLUSIONS AND ORDER

The above-entitled matter came on for hearing before Administrative Law Judge (ALJ) George A. Beck on September 12-13, 2000 at the McLeod County Sheriff’s Office, 810 East 10^th Street, Glencoe, Minnesota.  The Complainant filed a post-hearing memorandum on November 6, 2000, and the Respondent filed its memorandum on December 5, 2000.  The record closed on December 21, 2000 with the filing of the Complainant’s reply brief.

Richard L. Varco, Jr., Assistant Attorney General, 525 Park Street, Suite 200, St. Paul, Minnesota, 55103-2106, appeared on behalf of the Commissioner or the Minnesota Human Rights Department (Complainant).  Duane G. Johnson, Attorney at Law, 4318 Xerxes Avenue North, Minneapolis, Minnesota 55412, appeared on behalf of Distinctive Dental Services, P.A. (Respondent).

NOTICE

Pursuant to Minn. Stat. § 363.071, subd. 2 and 3, this Order is the final decision in this case.  Under Minn. Stat. § 363.072, the Commissioner of the Department of Human Rights or any person aggrieved by this decision may seek judicial review pursuant to Minn. Stat. §§ 14.63 to 14.69.

STATEMENT OF ISSUES

1.      Whether Distinctive Dental Services discriminated against Dr. Bryan Correll on the basis of martial status in violation of Minnesota Statute § 363.03, subd. 1(2)(b) and, if so, what damages or other relief, if any, should be assessed pursuant to Minn. Stat. § 363.071, subd. 2.

2.      Whether a civil penalty is appropriate in this case.

Based upon all the proceedings herein, the Administrative Law Judge makes the following:

FINDINGS OF FACT

1.  Bryan Correll is a licensed dentist who currently practices dentistry in Spokane, Washington.  Dr. Correll obtained his D.D.S. degree from the University of Minnesota in June of 1993.[1]

2.  Dr. Michael Thoennes is the sole owner and operator of Distinctive Dental Services.  Distinctive Dental Services has dental clinics in Winsted, Howard Lake and Columbia Heights, Minnesota.  The Winsted and Howard Lake clinics are approximately six miles apart.  Dr. Thoennes works primarily at his Winsted clinic.[2]

3.  Howard Lake has a population of about 1,300 people and Winsted has a population of approximately 1,500 people.[3] 

4.  On February 7, 1994, Bryan Correll entered into a Dentist Employment Agreement with Distinctive Dental Services.  Dr. Correll began his employment on February 9, 1994.[4]

5.  Paragraph 17 of the Employment Agreement between Dr. Correll and Distinctive Dental Services provided that:

During the period of employment, Employee shall not engage in any other business activity, directly or indirectly, regardless of whether it is for profit, gain, or otherwise that is similar to the business activity of Employer within 7 miles of the office of Employer.[5]

6.  Dr. Correll started practicing at the Howard Lake clinic three days a week on February 9, 1994.  By late spring of 1994 the practice grew, and Dr. Correll began working four days a week.[6] 

7.  In April or May of 1994, Dr. Thoennes told Dr. Correll that he was not comfortable with Dr. Correll performing one-step root canals.  Dr. Correll responded to Dr. Thoennes’ concern by saying “okay”.  Dr. Thoennes interpreted Dr. Correll’s response to mean that Dr. Correll would stop performing one-step root canals.  Dr. Correll, however, continued to perform one-step root canals because Dr. Thoennes did not specifically forbid him from doing so.[7] 

8.  In May of 1994, Dr. Correll called Dr. Thoennes to complain about a “massive hole” in his schedule due to patient cancellations.  Dr. Correll was upset and demanded that Dr. Thoennes send some of his scheduled patients over to the Howard Lake office for Correll to see.  Dr. Correll told Dr. Thoennes that he owed him the patients and that Thoennes was “full of hot air”.[8]

9.  In June 1994, Bryan Correll’s wife, Mary Beth Correll, graduated from the University of Minnesota’s dental school.[9] 

10.  During the course of his employment at the Howard Lake clinic, Dr. Correll talked with his assistants about his desire to own his own dental practice.  Dr. Correll also spoke of an opportunity he had to purchase an established dental practice from a friend of his father in Spokane, Washington.[10]

11.  Dr. Correll grew up in Washington and his parents currently live outside of Spokane.[11]

12.  On the afternoon of June 16, 1994, Dr. Correll closed the Howard Lake office without Dr. Thoennes’ permission.  Dr. Correll had no appointments scheduled in the afternoon and his parents were in town visiting for his wife’s graduation.[12] 

13.  In August of 1994, Dr. Thoennes expressed concern to an associate dentist at his Colombia Heights office that Dr. Correll might be billing for composites when applying only sealants.  Sealants are an unfilled resin-type material that is placed in the grooves of the posterior teeth to prevent decay.  Composites are a filled resin restoration material with porcelain particles.  Sealants are less durable and less expensive than composites.[13] 

14.  On or about September 2, 1994, Dr. Thoennes learned that Dr. Correll’s wife had accepted a dentist position with Dr. James Neff’s office in Winsted.  Dr. Neff and Distinctive Dental Services are the only dental care providers in the city of Winsted.[14] Dr. Thoennes was angry when he learned of Mary Beth Correll’s employment and he was concerned about the confidentiality of his records and trade secrets.

15.  Dentistry is a competitive business, particularly in a small town where there is a limited patient base.[15] 

16.  On September 7, 1994, Dr. Thoennes faxed to Dr. Correll questions regarding his treatment of a patient who had sustained extensive damage to his teeth due to an automobile accident.  Dr. Thoennes was concerned that some of the work was improperly billed to the patient’s automobile insurance because the damage appeared to be due to neglect and decay rather than to the trauma of the accident.[16] 

17.  On September 9, 1994, Mary Beth Correll began working at Dr. James Neff’s clinic.[17] 

18.  On September 9, 1994, Dr. Michael Thoennes called Bryan Correll and asked to meet with him at the end of the day.  During their late afternoon meeting, Dr. Thoennes asked Dr. Correll questions regarding his treatment of the patient injured in the automobile accident.  Specifically, Dr. Thoennes wanted Dr. Correll to explain why he had performed root canals and placed crowns on certain teeth.  After discussing the patient’s care, Dr. Thoennes requested that Dr. Correll write in the patient’s chart that he believed all of the treatment performed was necessary due to the damage caused by the automobile accident.[18] 

19. After Dr. Correll had written in the patient’s chart, Dr. Thoennes asked Dr. Correll to explain his wife’s recent employment with Dr. James Neff in Winsted.  Dr. Thoennes showed Dr. Correll the local newspaper article and photo announcing his wife’s employment with Dr. Neff.  Dr. Correll confirmed that his wife had taken a position at Dr. Neff’s clinic.  Dr. Correll further stated that his wife’s employment was none of Dr. Thoennes’ business and that Dr. Thoennes had no right dictating where his wife could work.  Dr. Thoennes responded that he thought Dr. Correll had been deceitful by not telling him about his wife’s job. 

20.  At the conclusion of the above discussion, Dr. Thoennes handed Dr. Correll a letter notifying him that he was terminating his employment.  The letter stated that Dr. Correll had committed a “defacto breach of contract” due to his wife contracting with Dr. James Neff to perform dental services within the City of Winsted.  The letter specifically referenced paragraph 17 of the contract.[19]

21.  After presenting Dr. Correll with the termination letter, Dr. Thoennes informed Dr. Correll that if his wife quit her job with Dr. Neff, Dr. Thoennes would not fire Dr. Correll.  Dr. Thoennes gave Dr. Correll until 9:00 p.m. on Sunday, September 11, 1994, to let him know whether his wife would continue working for Dr. Neff.[20]

22.    On the evening of September 11, 1994, Bryan Correll called Dr. Thoennes and told him that his wife was not going to quit her job with Dr. Neff.  As a result, Dr. Thoennes terminated Dr. Correll.[21]

23.  At the time of his termination, Dr. Correll was earning on average $386.49 a day at DDS.[22] 

24.  At the time of his termination Dr. Correll and his wife and baby resided in Waconia, Minnesota in a home they purchased in March of 1994.  In addition to their mortgage, the Corells had approximately $100,000 in educational loan debt.

25.  Dr. Thoennes hired another dentist, Dr. Greg Glavan, to replace Dr. Correll in mid-October of 1994.[23]

26.  After being fired from his position at Distinctive Dental Services, Bryan Correll looked for other dentist positions.  He received job listings from the University of Minnesota’s dental school placement office, contacted dental practice brokers, joined dentist study clubs, and made cold calls from listings in the Yellow Pages.[24]  Despite these efforts and several interviews, Bryan Correll was unable to secure a position as a dentist until February 7, 1995 when he took a job working three days a week with a Dr. John Maeurer.  Dr. Correll was paid $45 an hour or 33% of production, less 1/3 the cost of lab work.[25] 

27.  There were employment opportunities in Minnesota for recent dental school graduates in 1994-1995.[26] 

28.  From February 7, 1995 through March 10, 1995, Dr. Correll earned approximately $3,000 from employment by Dr. Maeurer.[27] 

29.  In March or April of 1995, Bryan Correll flew out to Spokane, Washington and met with Dr. Ed Torgerson regarding the purchase of Dr. Torgerson’s dental practice.  Dr. Torgerson is a long-time friend of Dr. Correll’s father and he offered Dr. Correll very reasonable terms for purchasing his practice.  During his visit, Dr. Correll agreed to work for and eventually purchase Dr. Torgerson’s dental clinic in Spokane, Washington.[28] 

30.  Dr. Correll’s wife, Dr. Mary Beth Correll, did not want to move to Spokane because she did not want to be separated from her family in Minnesota.[29] 

31.  Bryan Correll and his wife moved to Spokane, Washington in August 1995.  Bryan Correll began working at Dr. Torgerson’s practice five days a week for 33% of production less 1/3 lab costs.[30] 

32.  As a result of being terminated, Dr. Correll suffered anxiety and feelings of inadequacy, frustration and anger.  In addition, the stress from being unemployed and the decision to move to Spokane caused strain in the Correll’s marriage.[31] 

33.  On September 7, 1995, Bryan Correll filed a charge of marital status discrimination with the Minnesota Department of Human Rights.

34.  After the Department of Human Rights made a probable cause determination favorable to Dr. Correll, Distinctive Dental Services sent Dr. Correll a demand for arbitration pursuant to paragraph 12 of the Employment Agreement.  Dr. Correll filed a petition for a stay of arbitration in district court arguing that the Human Rights Act precludes arbitration of this dispute.  On March 16, 2000, the Minnesota Supreme Court ruled in Dr. Correll’s favor and ordered that the arbitration be stayed pending the resolution of Dr. Correll’s Human Rights Act claim.  Dr. Correll incurred $32,463.60 in attorney fees in challenging Distinctive Dental Services’ arbitration demand.[32] 

35.  On March 5, 1998, counsel for Dr. Thoennes was served with the Complaint, Notice of and Order for Hearing and Notice of Appearance in this matter. 

36.  The Complaint alleged that Distinctive Dental Services terminated Dr. Correll’s employment on the basis of marital status discrimination in violation of Minn. Stat. § 363.03, subd. 1(2)(b) (1996). 

37.  Following the March 16, 2000 decision of the Minnesota Supreme Court, this matter was scheduled for hearing.  The hearing took place on September 12-13, 2000.

CONCLUSIONS

1.  The Administrative Law Judge and the Minnesota Department of Human Rights have jurisdiction in this matter pursuant to Minnesota Statutes §§ 14.50 and 363.071.

2.  The Department has complied with all relevant substantive and procedural requirements of law and rule including providing proper notice of the hearing in this matter.

3.  Under Minn. Stat. § 363.03, subd. 1(2)(b) it is an unfair discriminatory practice for an employer to discharge an employee because of marital status.

4.   The Respondent is an employer within the meaning of Minn. Stat. § 363.01 subd. 17. 

5.  The Complainant has the burden of proof to establish by a preponderance of the evidence that Distinctive Dental Services discriminated against Dr. Bryan Correll on the basis of marital status in violation of Minn. Stat. § 363.03, subd. 1(2)(b).  

6.  The Complainant has presented direct evidence that Distinctive Dental Services discriminated against Dr. Bryan Correll based on marital status.[33]

7.   The Complainant has established a prima facie case of marital status discrimination by a preponderance of the evidence.

8.   The Respondent has advanced legitimate nondiscriminatory reasons for its termination of the Charging Party.

9.   The Complainant has demonstrated that the asserted reasons were pretextual.

10.       The Complainant has established by a preponderance of the evidence that Distinctive Dental Services discriminated against Dr. Bryan Correll on the basis of marital status in violation of Minn. Stat. § 363.03, subd. 1(2)(b).

11.       The Respondent has not proved that its termination of the Charging party was based on a bona fide occupational qualification.

12.      Minn. Stat. § 363.071, subd. 2, permits an award of compensatory damages up to three times the amount of actual damages sustained by the victim of discrimination.  Dr. Bryan Correll is entitled to compensatory damages in the amount of $34,103.04, which reflects Dr. Correll’s six months of lost wages from DDS less the wages he earned from Dr. Maeurer from February 7, 1995 to March 10, 1995.

13.      Under Minn. Stat. § 363.071, subd. 2 and the standards set forth in Minn. Stat. § 549.20, punitive damages may be awarded for discriminatory acts where there is clear and convincing evidence that the acts of the employer show a deliberate disregard for the rights or safety of others.  Punitive damages will be considered after submission of the financial data.

14.      Minn. Stat. § 363.071, subd. 2, requires the award of a civil penalty to the State when an employer violates the provisions of the Human Rights Act.  The statute requires consideration of the seriousness and the extent of the violation, the public harm occasioned by it, the financial resources of the Respondent, and whether the violation was intentional.  A civil penalty will be considered upon submission of the Respondent’s tax returns.

15.      Minn. Stat. § 363.071, subd. 7, requires the award of litigation and hearing costs of the Department of Human Rights unless payment of the costs would impose a financial hardship on Respondent.  Litigation and hearing costs will be considered upon submission of the Respondent’s tax returns and of the costs incurred by the Department of Human Rights.

16.    Within 10 working days of the date of this order the Respondent, Distinctive Dental Services, shall submit its federal tax returns, and accompanying forms and schedules, for the years 1997, 1998 and 1999 to the Administrative Law Judge.  The submission will be a sealed exhibit in the hearing record.

17.    That within 10 working days the Complainant shall submit an affidavit setting out in detail the Department’s litigation and hearing costs.

            Based on the foregoing Conclusions, the Administrative Law Judge makes the following:

ORDER

IT IS HEREBY ORDERED THAT:

1.      Respondent cease and desist from unfairly discriminating against employees on the basis of marital status, pursuant to Minn. Stat. § 363.03, subd. 1(2)(b).

2.      Respondent pay compensatory damages to Bryan Correll in the amount of $34,103.04.

3.      That, within 10 working days of the date of this order, Respondent submit its federal tax returns, and accompanying forms and schedules, for the years 1997, 1998, and 1999 to the Administrative Law Judge.

4.      That, within 10 working days of the date of this order, Complainant submit an affidavit setting out in detail the Department’s litigation and hearing costs pursuant to Minn. Stat. § 363.071, subd. 7.

 

 

Dated this ___ day of January, 2001.              

 

GEORGE A. BECK

Administrative Law Judge

Reported: Transcribed (2 volumes).

NOTICE

Pursuant to Minn. Stat. § 14.62, subd. 1, the agency is required to serve its final decision upon each party and the Administrative Law Judge by first class mail.

MEMORANDUM

The Minnesota Department of Human Rights brought a marital status discrimination charge against Distinctive Dental Services (“DDS”).  The Minnesota Human Rights Act provides in part that it is an unfair employment practice for an employer to discharge an employee based upon marital status, except when marital status is a bona fide occupational qualification.[34]  The MHRA’s definition of “marital status” includes, for purposes of employment cases, protection against “discrimination on the basis of the identity, situation, or beliefs of a spouse or former spouse.”[35]

The Department has presented direct evidence that DDS terminated Dr. Bryan Correll based on his wife’s employment with a competitor dentist.  The Department established that on September 9, 1994, DDS’s owner Dr. Michael Thoennes gave Dr. Correll a letter terminating him from employment.  The letter referenced paragraph 17 of Dr. Correll’s employment agreement with DDS and stated that “there is a defacto breach of contract by you since Dr. James Neff had contracted with your wife to perform dental services within the City of Winsted.”[36]  In addition to the letter, Dr. Thoennes further told Dr. Correll that if his wife quit her employment with Dr. Neff, he would not be terminated from DDS.  And Dr. Thoennes gave Dr. Correll until the following Sunday to decide whether his wife would quit her job with Dr. Neff.  Ultimately, Dr. Correll’s wife did not give up her employment with Dr. Neff and Bryan Correll was terminated. 

When a Complainant alleges direct evidence of discriminatory intent, it is not necessary to use the McDonnell Douglas burden shifting analysis.[37]  Direct evidence is “evidence of conduct or statements by persons involved in the decisionmaking process that may be viewed as directly reflecting the alleged discriminatory attitude . . . sufficient to permit the fact finder to infer that that attitude was more likely than not a motivating factor in the employer’s decision.”[38]  Here the Department has presented direct evidence that Dr. Thoennes fired Dr. Correll based on his wife’s employment with a competitor dentist in violation of the Minnesota Human Rights Act’s prohibition against discrimination on the basis of marital status.  Accordingly, the Department has established, by a preponderance of the evidence, a prima facie case of discrimination.

Even if the Administrative Law Judge were to apply the McDonnell Douglas burden shifting analysis to this case, however, the outcome would be the same.  Under McDonnell Douglas, the complainant must first establish a prima facie case of discrimination.  In employment discrimination cases, a complainant establishes a prima facie case by demonstrating that: (1) he is a member of a protected class; (2) he met applicable job qualifications; (3) despite these qualifications, he was discharged; and (4) after he was discharged, the employer sought people with Complainant’s qualifications.[39]  If the Complainant carries his initial burden of production, the burden shifts to the employer to “articulate some legitimate, nondiscriminatory reason for the employee’s termination.”[40]  The burden then shifts back to the Complainant to show that the reason offered by the employer was pretextual.[41] 

In this case, Complainant has established a prima facie case.  Dr. Correll is a member of a protected class, he was qualified for his position at DDS, he was terminated despite these qualifications, and Dr. Thoennes hired another dentist to replace him.  The Respondent has raised legitimate, non-discriminatory reasons for firing Dr. Correll.  Specifically, Respondent contends that DDS terminated Dr. Correll based on insubordination and concerns that Dr. Correll was engaging in improper billing practices.  The Complainant, however, has established that these proffered reasons are pretextual and that the true reason for his discharge was his wife’s employment with Dr. Neff.  Not only is Mary Beth Correll’s employment with Dr. Neff the only reason given for Dr. Correll’s discharge in his termination letter, but Dr. Thoennes told Dr. Correll that if Mary Beth Correll quit her employment with Dr. Neff, Dr. Correll could keep his job.  The record indicates that the concerns that Dr. Thoennes had about Dr. Correll’s practices were not substantial and were at least in part based upon differing professional opinions.  Nor were the concerns directly linked to his termination.  It cannot be concluded that Dr. Correll would have eventually been fired due to misconduct.  In other words, Dr. Thoennes conditioned Dr. Correll’s termination on only one factor – his wife’s employment with a competitor dentist.[42]

Respondent also argues that a proper interpretation of marital status discrimination requires a showing of bias on the part of the employer against the institution of marriage.  And Respondent contends that such a bias was not demonstrated here.  The MHRA’s definition of marital status discrimination in employment cases, however, specifically includes “protection against discrimination on the basis of the identity, situation, actions, or beliefs of a spouse or former spouse.”[43]  This language was added to the definition to protect an employee against discrimination due to the actions of a spouse that an employer finds objectionable.[44]  Dr. Correll was fired due to his wife’s actions. 

BFOQ Defense

Respondent also argues that requiring that an employee’s spouse not work for a competitor is a bona fide occupational qualification (BFOQ).  Consequently, Respondent claims that terminating Dr. Correll based on his wife’s employment with Dr. Neff was a reasonable and legitimate business decision and not marital status discrimination.  According to DDS, it was reasonable for Dr. Thoennes to be concerned that an employee not have a confidante working for a competitor.  Dentistry is a highly competitive business, particularly in small communities where there is a limited patient base.  In the small towns of Winsted and Howard Lake, Dr. Neff and Dr. Thoennes were the only practicing dentists.  Moreover, there was a history of personal antipathy between the two.  Given this situation, DDS agrues that Dr. Thoennes had good reason to be concerned that Mary Beth Correll could, in the course of her employment with Dr. Neff, divulge competitive information regarding DDS’s business practices and trade secrets to Dr. Neff. 

The BFOQ defense is an exception to the Minnesota Human Rights Act’s prohibition against discriminatory employment practices.  As such, it is read narrowly.  Minnesota appellate courts have held that only where a business necessity is “compelling” and “overriding” may an otherwise-unlawful job qualification be allowed.[45]  Based on the evidence in the record, the Administrative Law Judge concludes that Dr. Correll’s termination by DDS is not protected by the BFOQ exception to employment discrimination under Minn. Stat. § 363.03, subd. 1.  While it is true that Dr. Neff was competing for patients with DDS, Respondent failed to establish what if any competitive information Bryan Correll had access to that might be passed along to his wife (and in turn to Dr. Neff).  In a city with 1,500 people, with two dentists, it seems unlikely that the dentists were unaware of the identity of the competitor’s patients.

Testimony from DDS’s expert, John Trask, with respect to “marketing programs”, methods of answering the telephone, and DDS’s dental insurance program was vague and insufficient to establish a business necessity.  It is not clear that any of DDS’s advertising and marketing efforts, or methods of answering the telephone are confidential.  And it is equally unclear what motive Bryan Correll would have for undermining his own patient base and income by divulging “trade secret” information to his wife to be passed on to DDS’s competition.  Correll was compensated based upon the number of patients he saw.  In short, in contrast to the case law it cites, DDS has failed to put forward a compelling and overriding business necessity to justify terminating Bryan Correll on the basis of his wife’s employment with Dr. Neff.  As the termination does not fall within the BFOQ exception, the ALJ concludes that DDS discriminated against Dr. Bryan Correll on the basis of marital status in violation of Minn. Stat. § 363.03, subd. 1.

Compensatory Damages

The Minnesota Human Rights Act authorizes the Administrative Law Judge to award compensatory damages to victims of discrimination.[46]  The purpose of compensatory damages is to place individuals who have been treated in a discriminatory fashion “in the same position they would have been in had no discrimination occurred.”[47]  The Administrative Law Judge has broad discretion to fashion an equitable back-pay award to Dr. Correll.  After a careful review of the record, the ALJ concludes that Dr. Bryan Correll is entitled to a back-pay award of six months lost wages.  Evidence presented at the hearing established that there were job opportunities in Minnesota for recent dental school graduates in 1994 and 1995.  The ALJ concludes that six months is a reasonable amount of time for Dr. Correll to have obtained another position, despite Dr. Correll’s testimony regarding the difficulties of his job search.  This conclusion is further supported by the fact that Dr. Correll did secure a part-time position with a Dr. Maeuer in February of 1995.  Therefore, the ALJ finds that six months of lost wages is an equitable back-pay award that will place Dr. Correll in the same position he would have been in had no discrimination occurred. 

The ALJ further determines that the rate of pay that should be used to calculate Dr. Correll’s back-pay loss is $386.49 a day.  This amount represents the average of Dr. Correll’s last five complete biweekly pay stubs.  From September 10, 1994 to March 10, 1995, Dr. Correll incurred six months of employment at DDS and a concurrent wage loss of $37,103.04.  Dr. Correll’s earnings of $3,000 from Dr. Maeuer from February 7, 1995 to March 10, 1995 should be subtracted from his lost wages at DDS.  Total lost wages for the six-month period amount to $34,103.04, and this is the amount to be awarded Dr. Correll.

Moreover, the ALJ does not find Dr. Correll’s subsequent move of his dental practice and family to Spokane, Washington to have been necessary or caused by his termination.  Dr. Correll is seeking $23,822.70 in moving expenses and other costs incurred as a result of relocating to Spokane.  In Graffius v. Control Data Corp[48], the court held that a terminated employee was entitled to recover travel expenses of $13,278 incurred in a career move that was the direct result of a discriminatory discharge.  In so awarding, the court noted that there was no evidence that accepting a job in New York was unnecessary, unreasonable or not caused by the termination. 

In the instant case, the ALJ finds that Dr. Correll’s decision to move his dental practice and family to Spokane, Washington was a personal one and not one caused by his termination from DDS.  The record established that Dr. Correll grew up in Washington and his parents still live outside Spokane.  The evidence also established that during his employment at DDS, Dr. Correll talked to his assistants about his desire to own his own practice and the opportunity he had to buy a practice in Spokane, Washington from his father’s friend.  Moreover, Dr. Correll testified that he made the decision to buy the practice in Spokane during a visit there in March or April of 1995.  And finally, there was evidence presented that the job market for dentists in Minnesota was not bad in 1994 and 1995.  Based on all of the above, the ALJ concludes that Dr. Correll’s decision to move to Spokane was not a direct result of his discriminatory discharge.  Therefore, Dr. Correll cannot be compensated for his moving expenses.

The Complainant also argues that Dr. Correll should be awarded damages for mental anguish as well as punitive damages.  Compensable mental anguish need not be severe or accompanied by a physical injury.  There must, however, be “substantial” or “extensive” evidence to support a finding of mental anguish.[49]  In this case, the evidence shows that the charging party was angry and suffered anxiety and stress due to his unemployment.  The evidence, however, is not so substantial or extensive as to support a damage award for mental anguish.  Moreover, the record reflects that the major of cause of the stress experienced by Bryan Correll and the strain on his relationship with his wife was a result of the decision to move to Spokane.  As the move to Spokane was not directly related to his termination, Dr. Correll cannot be awarded damages for stress caused by the move.

Finally, in order to support an award of punitive damages, the Complainant must show by clear and convincing evidence that the employer’s acts demonstrated deliberate disregard for the rights of others.[50]  The statute directs the decisionmaker to consider, among other factors, the financial condition of the Respondent and the total effect of the damages awarded.[51]  Accordingly, a punitive damages award will be considered only after submission of financial information by DDS and a calculation of the litigation and hearing costs.

Attorney’s Fees

Minn. Stat. § 363.071, subd. 2 (1998) authorizes the Administrative Law Judge to award “reasonable attorney’s fees.”  In determining the proper amount of attorney’s fees to award, a trial court should employ the two-step analysis as set forth in Hensley v. Eckerhart[52].  The Hensley decision requires, as a first step, that a “lodestar” figure be calculated by multiplying the hours reasonably expended in the matter by the reasonable hourly rate.  The Supreme Court in Hensley and later decisions has approved consideration of a twelve-factor checklist in arriving at a reasonable and proper award of attorney’s fees.[53]  These factors include the time and labor required; the novelty and difficulty of the questions; the skill required to perform the legal services properly; the customary fee; the amount involved and the results obtained; the attorney’s experience, reputation and ability; and awards in similar cases.[54]

In addition to litigation and hearing costs, Complainant is requesting that Dr. Correll be awarded $32,463.30 in attorney’s fees incurred in challenging DDS’s arbitration demand.  In the procedural history of this case, DDS exercised its right to demand arbitration under the employment contract after Dr. Correll filed his discrimination claim.  Dr. Correll sought a stay of arbitration and the matter was litigated in Minnesota district and appellate courts.  Eventually the Minnesota supreme court held that the MHRA precludes arbitration of a pending human rights act claim.[55]  Consequently, DDS’s demand for arbitration was stayed and this matter proceeded to a contested case hearing.  The Department argues that Dr. Correll should recover the reasonable attorney’s fees he incurred in litigating DDS’s demand for arbitration.  According to the Department, Dr. Correll’s use of an attorney to represent him in proceedings involving the arbitrability of his claim was “both necessary and reasonable”. 

The general rule is that attorney’s fees are not allowed in civil actions unless authorized by statute.[56]  The issue presented in this matter is whether the litigation over the arbitration clause of the employment contract was inextricably bound up with Dr. Correll’s discrimination claim, or whether the arbitration litigation was a separate proceeding for which Dr. Correll may not recover attorney’s fees under the Human Rights Act.  In analogous Title VII litigation, fees for work done in arbitration proceedings have been awarded provided that there is a causal link between the prosecution of the litigation and the successful outcome of the arbitration proceeding.[57] 

In the instant matter, the litigation that followed the demand for arbitration revolved around a legal procedural issue, not the merits of the claim.  DDS was exercising its right to demand arbitration under its contract with Dr. Correll.  Given that the arbitrability of Dr. Correll’s pending claim was a question of first impression and was litigated to the Minnesota supreme court, it cannot be said that DDS was pursuing its claim in bad faith.  Nor can any portion of the legal fees incurred in staying the arbitration be linked to the merits of the claim in this contested case matter.  The litigation over the arbitration of Dr. Correll’s claim involved a procedural question and was not causally linked to the merits or success of his discrimination claim.  Consequently, the Department’s request that Dr. Correll be awarded $32,463.30 in attorney’s fees incurred in challenging DDS’s arbitration demand must be denied.  The Complainant will be awarded litigation and hearing costs upon submission of the Respondent’s tax returns and of the costs incurred by the Department unless payment of the costs would impose a financial hardship on the Respondent.[58]

G.A.B.