Deweese v. Lakeview Clinic (Summary)

EMPLOYMENT DISPUTE

Deweese v. Lakeview Clinic, A13-2152A13-2160 (Minn. Ct. App. Sept. 8, 2014)

The Court of Appeals of Minnesota affirmed in part and reversed in part a trial court’s verdict against an employer, holding that there was sufficient evidence for the jury to find that the employer breached its fiduciary duty to its stockholder/employee and wrongfully terminated his shareholder status.

Plaintiff, a physician, was a stockholder in his employer’s clinic. The physician went on a medical leave of absence after he developed psychiatric symptoms and was diagnosed with bipolar disorder. Prior to returning to work, the physician met with the employer’s executive board. The physician informed the executive board that he was cleared to work on a part-time basis. The executive board informed the physician that due to his new status, he was required to redeem his shares of stock in the employer.

A few months later, the physician’s symptoms returned while he was on vacation. In order to get a prescription of Seroquel, the physician lied to his former treating physician/coworker at the employer about his current treatment. This incident was reported to the employer’s executive committee who immediately placed the physician on a paid administrative leave. Consequently, the physician forged a letter from his psychiatrist stating that he could return to work without restrictions. Upon discovery, the employer terminated the physician and the physician brought suit, claiming that the employer breached its fiduciary duty and wrongfully terminated his shareholder status.

The court held that there was sufficient evidence for the jury to find that the employer breached its fiduciary duty and wrongfully terminated the physician’s shareholder status. The employer’s executive board did not “deal openly, honestly, or fairly” with its stockholder, as is required by law. Instead, it fraudulently informed the physician that he was required to relinquish his stock before he could return to work on a part-time basis. No such requirement was in any stockholder agreement or has ever been enforced. The employer improperly induced the physician to redeem his shares, and the physician relied on this inducement. The jury found that without the employer’s breach of its fiduciary duty the physician would have held onto the employer’s stock until his retirement and awarded him $1,285,384.

Next, the court held that pursuant to state statute, the physician’s award should be reduced by $155,000, the amount the employer paid out in disability benefits to the physician while he was on leave.