Lapushner v. Admedus Ltd.

Background

Jenny Lapushner, a New Jersey resident, was a former employee of Admedus Ltd. and Admedus Corporation. She was hired in May 2017 to sell medical products to hospitals and healthcare providers in New York and New Jersey. Admedus terminated her employment in January 2018.

Lapushner alleged that she experienced discriminatory and sexually harassing comments and conduct during her employment. She reported the alleged conduct to Admedus management in Minnesota on September 14, 2017. She further alleged that the defendants retaliated by criticizing her performance, limiting her sales opportunities, disregarding communications, denying certain requests, and taking other employment-related actions before terminating her.

Counts 1 and 2 of the Second Amended Complaint asserted federal discrimination and retaliation claims under Title VII against Admedus. Counts 3 through 10 asserted discrimination and retaliation claims under New York state law and the New York City Administrative Code against all defendants.

Motion and Parties’ Arguments

The defendants moved under Federal Rule of Civil Procedure 12(b)(6), which allows dismissal when a complaint does not state a legally sufficient claim. They asked the court to dismiss Counts 3 through 10 because Minnesota law, rather than New York law, applied. They also argued that the individual defendants should be dismissed because the claims against them were based only on New York law.

Lapushner argued that deciding the applicable law was premature before discovery, that Minnesota and New York law did not conflict, and that New York law should apply if there was a conflict.

The court did not consider a separate argument that the allegations against the individual defendants were insufficient under either state’s law. The defendants raised that argument for the first time in their reply brief, and the court declined to consider it.

Choice of Law

Because the case was in federal court based on diversity jurisdiction, the court applied Minnesota’s choice-of-law rules. The court first found an actual conflict between Minnesota and New York law concerning direct liability for harassment or discrimination. Under the New York City Administrative Code, an employee or agent may be directly liable for harassment or discrimination. Under the Minnesota Human Rights Act, the court stated that only an employer may be directly liable for harassment or discrimination.

The court found that both states’ laws could constitutionally be applied. Although Lapushner lived and worked primarily outside Minnesota, she attended trainings and business meetings there, communicated with Minnesota-based management, and alleged that harassment and discrimination occurred there. The court held that these connections were sufficient for Lapushner to have standing to bring a claim under the Minnesota Human Rights Act and made applying Minnesota law constitutionally permissible.

The court also held that New York had sufficient contacts with the dispute because Lapushner worked there for Admedus, at least one alleged harassing comment was made there, and some effects of the alleged conduct were felt there.

The court then considered Minnesota’s five choice-of-law factors: predictability of result, maintenance of interstate order, simplification of the judicial task, advancement of the forum’s governmental interests, and application of the better rule of law. Predictability did not favor either state because the alleged harassment, discrimination, and retaliation were not consensual transactions. The interstate-order, judicial-task, and Minnesota-governmental-interest factors favored Minnesota. Because those factors resolved the issue, the court did not address the better-rule-of-law factor.

Ruling

The court concluded that Minnesota law applied. It therefore dismissed Counts 3 through 10 because those counts were based on New York law. The court also dismissed the individual defendants because the remaining Counts 1 and 2 applied only to Admedus and no viable cause of action remained against the individuals.

Judge Ann D. Montgomery ordered that the defendants’ joint motion to dismiss was granted; Counts 3 through 10 were dismissed without prejudice; and Joe Palianto, Christopher Olig, Wayne Paterson, David St. Denis, Benjamin Jensen, and Michael McGrath were dismissed without prejudice.