Mathiason v. Shutterfly, Inc.

Background

Rita Mathiason alleged that Shutterfly, Inc. violated the Minnesota Human Rights Act, the Fair Labor Standards Act, and the Minnesota Whistleblower Act by terminating her employment after she complained that Shutterfly had misclassified her as an independent contractor. Mathiason moved to amend her complaint to add a claim for punitive damages related to her Minnesota Whistleblower Act claim.

A magistrate judge denied the motion to amend. The magistrate judge concluded that Mathiason had not adequately pleaded that her complaints to Shutterfly constituted activity protected by the Minnesota Whistleblower Act. The opinion notes that the magistrate judge also determined that certain federal and state income-law provisions identified in Mathiason’s complaint did not apply to the alleged facts.

Issue

The court reviewed Mathiason’s objection to the magistrate judge’s order. Mathiason argued that the magistrate judge had failed to address whether her proposed amended complaint and related documents adequately stated a claim for punitive damages.

Under Minnesota law, punitive damages require clear and convincing evidence that the defendant acted with deliberate disregard for another person’s rights or safety. In deciding whether an amendment would be futile, a court may deny the amendment if the proposed claims would not survive a motion to dismiss for failure to state a claim.

Ruling

The court sustained Mathiason’s objection. It held that the magistrate judge had erred by failing to assess whether the proposed amended complaint plausibly alleged that Shutterfly acted with deliberate disregard for Mathiason’s rights. The court remanded the matter for renewed disposition by the magistrate judge.

The court did not decide whether Mathiason had adequately pleaded a punitive-damages claim. It also did not finally decide whether her complaints constituted statutorily protected activity under the Minnesota Whistleblower Act. The order expressly sustained the objection and remanded the matter; it did not grant Mathiason’s motion to amend.