United States Court of Appeals

FOR THE EIGHTH CIRCUIT

 

Nos. 97-2969 and 97-4380

 

Erik Gundacker, *

*

Appellant, *

* Appeals from the United States

v. * District Court for the

* District of Minnesota.

Unisys Corporation, *

*

 Appellee. *

 

Submitted: June 11, 1998

 Filed: August 7, 1998

 

Before BOWMAN, Chief Judge, HEANEY and LOKEN, Circuit Judges.

 

HEANEY, Circuit Judge.

In this diversity action, Erik Gundacker appeals the district court’s grant of

summary judgment to Unisys Corporation on his retaliation claim under the Minnesota

Whistleblower Act, Minn. Stat. Ann. §§ 181.931-937 (West Supp. 1998), and the

district court’s finding that a document inadvertently disclosed to Unisys during

discovery was privileged and had to be returned. As part of this consolidated appeal,

Gundacker and his attorney, Dale Nathan, also challenge the district court’s decision

to assess sanctions against them. We affirm the district court’s grant of summary
2

judgment and finding that the inadvertently disclosed document was privileged, reverse

any sanctions levied against Gundacker, and remand for a proper determination of

monetary sanctions against Nathan. 

I.

For several years, Gundacker worked as a software manager in Unisys’ defense

business. When Gundacker was forty-two-years old, Unisys laid Gundacker off during

a company-wide reduction in force (RIF). According to Gundacker, during the course

of his employment with Unisys, he protested what he considered to be illegal orders by

the company. Specifically, Gundacker contends that Unisys ordered or asked him to:

(1) make illegal charges in a naval contract; (2) arbitrarily increase a price estimate in

a naval contract; (3) submit unrealistically low bids in a naval contract; (4) begin work

on a project before receiving naval approval; and (5) illegally use replacement

personnel as part of a government contract when it started layoffs in November 1993.

In November 1993, when Unisys began conducting involuntary layoffs it

required Gundacker's supervisor, Judith Groff, to rank employees according to the

skills necessary to complete existing and future projects. After assessing Gundacker,

Groff concluded that of those within Gundacker's grade position, laying off Gundacker

would have the least impact. Gundacker claims that within the same comparison group,

his performance review went from a 12/37 (i.e., 12th best of 37 employees) to 37/37.

On December 14, 1993, Unisys relieved Gundacker of some of his managerial

responsibilities. 

On January 24, 1994, Unisys laid Gundacker off. Shortly before his termination,

Gundacker claims that Groff wrote an internal note evidencing that Unisys fired

Gundacker because he protested Unisys’ allegedly illegal activity. The handwritten

note stated:
3

Prior to 15 Nov RIF - about Nov. 5 - [Gundacker] sent a letter to a number

of people (Jerry, Judy, Huff, ?) Stating that the people on layoff were

critical & shouldn't be let go. Caused a ruckus through Bill, etc. with the

last minuteness of it. Upshot was, he was relieved of his mgm't

responsibilities during week of Nov. 15 & resisted the acceptance until

meeting in Dec. -- Talked to Jerry about being on probation, etc.

(Appellant’s App. at 105.) 

Soon after he was laid off, Gundacker brought suit against Unisys alleging that

Unisys retaliated against him for protesting illegal activity. At the beginning of

discovery, Unisys’ lawyers inadvertently released a document to Nathan. The

document contained information related to an internal investigation conducted by

Unisys’ lawyers to determine, in part, whether Unisys participated in illegal conduct.

Upon realizing their mistake, the attorneys asked Nathan to return the document. They

claimed that the document was privileged attorney work product and asked that Nathan

not use it. Several days after Nathan gave the document back, Unisys’ lawyers asked

Nathan whether he had retained a copy. He refused to answer, and Unisys again asked

Nathan to return the original and all other copies. Nathan wanted to use the document

as part of a separate whistleblower claim, known as a qui tam action, against Unisys.

The magistrate determined that the document was privileged as attorney work product.

The district court agreed with the magistrate’s conclusion.

After the parties agreed to a confidentiality stipulation, on January 9, 1995, the

magistrate entered a protective order. Nathan repeatedly disregarded the order. For

example, despite the fact that the separate qui tam action against Unisys was sealed

entirely, Nathan continually referred to the qui tam action as part of Gundacker’s

pleadings in this case.

While Gundacker was working at Unisys, he took several cartons of internal

company documents and retained several other documents that were given to him in the
 The record indicates that Nathan did, in fact, speak to at least one member of the 1

press about this case and the separate qui tam action.

4

course of his employment. Unisys brought a counterclaim against Gundacker requesting

that all documents be returned, and that Nathan be prohibited from disclosing any

information from the documents. On April 11, 1997, the parties agreed that Unisys

would dismiss its counterclaim against Gundacker. Gundacker, in turn, agreed to return

all Unisys documents in his possession. The parties agreed that the documents would

be coded, supervised by a third party, and stored at Unisys’ lawyers office with the only

key placed under seal in the court file.

Under the agreement, Nathan could review documents relevant to this case, but

the documents would remain under seal. Further, if Gundacker ultimately lost on

appeal, Unisys would take possession of the documents. However, if Gundacker

succeeded on appeal, Gundacker could seek a court order allowing him to use the

documents. All parties agreed that because of the settlement agreement, Unisys’

pending motion for a temporary restraining order was moot. 

Nevertheless, shortly after the parties reached their settlement agreement, Nathan

sent a letter to Unisys claiming that the agreement did not prevent him from sending

documents to law enforcement officials. The magistrate requested that the parties be

available for an April 18, 1997 telephone conference call. On April 17, 1997, Nathan

sent a letter to Unisys’ lawyers indicating that he would tape the telephone conference

call and possibly have the media present. He also stated that he reserved the right to

provide copies of the tape and letters from Unisys’ attorneys to federal officials, the

Lawyers Professional Responsibility Board, and the media. Nathan wrote: 1

Nothing less than a written order not under seal by a judge specifically

prohibiting me from providing copies of the Gundacker documents to the

United States Government will prevent me from providing these
5

documents to the United States Government if we decide to do so. We

will obey such an order if it is issued. We will also appeal that order.

(Appellee’s App. at 55.) 

Nathan also stated that the various judges assigned to this case were part of a

cover-up and were impeding a federal investigation. On April 21, 1997, the magistrate

convened a meeting between the parties to discuss the court records remaining under

seal. Unisys’ lawyers were concerned that Nathan would turn documents over to the

United States Attorney. Nathan stated that he would only do so if he were subpoenaed

but he would not ask for a subpoena. He specifically asked that the record show he

would not request a subpoena, and assured Unisys that if he were subpoenaed, he would

first contact Unisys.

After the conference, however, Nathan contacted an Assistant United States

Attorney (AUSA) and told him about the conversation with the magistrate. The AUSA

served Gundacker with a subpoena. Relying on Nathan’s advice, Gundacker complied

with the subpoena. Despite his assurances to the contrary, Nathan turned over the

documents without first contacting Unisys, stating that he forgot the court's order and

inadvertently made a mistake.

Because of their conduct, the district court assessed sanctions against Nathan and

Gundacker. The district court found that Gundacker and Nathan acted in bad faith in

relation to the Federal Rule of Civil Procedure 16 settlement conference and vexatiously

and unreasonably multiplied the proceedings under 28 U.S.C. § 1927. The court then

determined that sanctions against the two were appropriate.

In sum, the district court granted Unisys’ summary judgment motion on

Gundacker’s whistleblower claim; found that the inadvertently disclosed document was

privileged under the attorney work product doctrine; assessed $11,247.06 in sanctions
 Gundacker argues that in addition to his 1(c) claim, he also alleged a 1(a) claim

2

under the Minnesota Whistleblower Act. Subdivision 1(a) provides:

An employer shall not discharge, discipline, threaten, otherwise

discriminate against, or penalize an employee regarding the employee's

compensation, terms, conditions, location, or privileges of employment

because:

6

against Gundacker and Nathan, holding them jointly liable; and assessed $6,111.07 in

sanctions against Nathan, individually, to reimburse Unisys for certain fees and costs.

The district court also ordered that Nathan be publicly admonished in an order to be

filed with the National Lawyer Regulatory Data Bank of the American Bar

Association’s Center for Professional Responsibility. Gundacker and Nathan appeal.

II.

Gundacker appeals the district court’s grant of summary judgment to Unisys and

its finding that the inadvertently disclosed document was privileged. Both Gundacker

and Nathan appeal the assessment of sanctions. 

We review a district court’s grant of summary judgment de novo. United States

ex. rel. Glass v. Medtronic, Inc., 957 F.2d 605, 607 (8th Cir. 1992). In considering

whether to grant summary judgment, a court examines all the “pleadings, depositions,

answers to interrogatories . . . admissions on file . . . [and] affidavits.” Fed. R. Civ. P.

56(c). After viewing the record in a light most favorable to the nonmoving party,

summary judgment is appropriate only where there is “no genuine issue of material fact

and . . . the moving party is entitled to judgment as a matter of law.” Langley v. Allstate

Ins. Co., 995 F.2d 841, 844 (8th Cir. 1993) (citations omitted). 

Gundacker first argues that Unisys retaliated against him in violation of

§ 181.932, subd. 1(c) of the Minnesota Whistleblower Act: 2
. . . .

(a) the employee, or a person acting on behalf of an 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. 

Minn. Stat. Ann. § 181.932, subd. 1(a) (West Supp. 1998). Having reviewed his

original complaint and several amended complaints, we conclude that Gundacker only

brought suit under 1(c). Despite this issue being flagged early in the proceedings,

Gundacker never asked for leave of court to amend his complaint in order to add a

claim under subd. 1(a) and he has not appealed this issue.

 Unisys argues that rather than review Gundacker’s claim as simply one of

3

retaliation, we should analyze his cause of action under the more exacting standard

applied in RIF cases. We need not address this issue because under either mode of

analysis, Gundacker is unable to establish a prima facie case of retaliation. 

7

An employer shall not discharge, discipline, threaten, otherwise

discriminate against, or penalize an employee regarding the employee's

compensation, terms, conditions, location, or privileges of employment

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. Ann. § 181.932, subd. 1(c) (West Supp. 1998). 

In determining whether an employee has been subjected to a retaliatory

discharge, Minnesota courts follow the three-part, burden-shifting analysis set forth in

McDonnell Douglas Corp. v. Green, 411 U.S. 792 (1973). See Hubbard v. United 3
8

Press Int’l, Inc., 330 N.W.2d 428, 444 (Minn. 1983) (citations omitted). In order to

make out a prima facie case of retaliation, Gundacker must prove: (1) he engaged in

conduct that is protected by the statute, (2) Unisys took adverse employment action

against him, and (3) a causal link between the adverse employment action and the

conduct protected by the statute. Id. 

Gundacker alleged five incidents in which he protested illegal orders. In

discussing why Gundacker failed to establish a prima facie case as it relates to the first

four incidents of alleged illegal activity, the district court stated:

Plaintiff has produced no evidence . . . tending to show the [first two]

incidents were a factor in his termination. . . . Even if [the] evidence [as

to the third and fourth incidents] were sufficient to create a genuine issue

of material fact on the causation element of plaintiff’s prima facie case, the

Court notes plaintiff has not shown that his actions during these two

incidents are protected by the whistleblower statute. With respect to the

bid, plaintiff provided no evidence he informed Unisys the low bid was

illegal. He also admitted he submitted the bid, and therefore cannot show

he refused the allegedly illegal order to submit it. See Minn. Stat. §

181.923, subd. 1(c).

The evidence with respect to the work authorization issue shows plaintiff

brought the problem to the attention of his superiors and the work

authorization was changed to his satisfaction. Management’s response to

his complaint takes this incident outside the whistleblower statute. See

Morrow v. Air Methods, Inc., 897 F. Supp. 418, 421 (D. Minn. 1995) (no

request to perform illegal act where management acknowledged and

corrected the error employee brought to his attention).

Gundacker, No. 4-95-676, Mem. & Order at 6-7 & n.3. Having carefully reviewed the

record, we agree with the district court’s analysis concerning the first four incidents.
9

With respect to the fifth incident, Gundacker sent a letter to his supervisor

complaining that the proposed layoffs would adversely affect his ability to complete

projects under his direction. Gundacker claims that Unisys told him to use substitute

personnel in place of those laid off. He asserts that he complained to Unisys that doing

so would be illegal. To support his assertion, Gundacker submitted expert testimony

to the effect that the following actions violate state and federal law: (1) using lower

grade personnel under a government contract without first advising the government, (2)

charging the government for deliveries when a contractor knows the work is incomplete

or of a lower quality, and (3) billing "direct charge worker" costs to overhead. Despite

the introduction of expert testimony, the district court concluded that because

Gundacker did not refuse Unisys’ order, as required by subd. 1(c) of the whistleblower

act, he failed to establish a prima facie case. We agree. 

In his deposition and supplemental memorandum opposing summary judgment,

Gundacker admitted that he used people that were not originally bid for the particular

task and that he "used other personnel under protest because there was no other option."

In his appellate brief, Gundacker stated that “he had no choice but to use replacement

personnel.” Because Gundacker did not refuse Unisys’ order to use substitute

personnel, the district court properly granted summary judgment in favor of Unisys. 

Gundacker next argues that because the crime-fraud exception applied, the

district court erred by determining that the inadvertently disclosed document was

privileged under the attorney work product doctrine. We review the district court’s

determination that a document is privileged as attorney work product for an abuse of

discretion. See Zar v. South Dakota Bd. of Exam’rs of Psychologists, 976 F.2d 459,

463-64 (8th Cir. 1992). 

The work product privilege operates to ensure that an opponent cannot secure

materials that an adversary has prepared in anticipation of litigation. Pittman v. Frazer,
 Ordinary work product includes such items as photographs and raw information. 4

See Pittman, 129 F.3d at 988 (citations omitted).

 Opinion work product includes conclusions, mental impressions, opinions, and

5

legal theories concerning the litigation. See Pittman, 129 F.3d at 988 (citations

omitted).

 Both parties agree that the document was ordinary work product and inadvertently 6

disclosed.

 There is also evidence in the record suggesting that Unisys generated the document 7

as part of a voluntary compliance program with the Department of Defense’s Criminal

Investigative Service.

10

129 F.3d 983, 988 (8th Cir. 1997) (citation omitted). The doctrine allows for discovery

of ordinary work product when there is a demonstrated substantial need and an inability 4

to otherwise procure the relevant material without undue hardship. See id. (citations

omitted). In rare circumstances, a party opponent is permitted to discover opinion work

product. See id. (citations omitted). Although disclosure to an adversary ordinarily

5

waives work product protection, there must be an intention that the opposing party see

the work product. See id. (citations omitted). Under the crime- fraud exception,

6

“[a]ttorney-client communications lose their privileged character when the lawyer is

consulted not with respect to past wrongdoings but rather to further a continuing or

contemplated criminal fraud or scheme.” In re Berkley & Co., 629 F.2d 548, 553 (8th

Cir. 1980) (citations omitted). 

Unisys claims that the inadvertently disclosed document was generated as part

of an internal investigation and that the data contained within the document was

otherwise readily discoverable. Unisys also claims that, at most, the document was

evidence of an alleged past crime or fraud and was produced, in part, to investigate

Gundacker’s claims in anticipation of litigation. Having carefully reviewed the record, 7

we hold that the district court did not abuse its discretion in finding that the document

was privileged under the attorney work product doctrine; that the crime-fraud exception
 Shortly before oral argument, Nathan filed a motion seeking to compel Unisys to 8

disclose whether it provided the government with a copy of the inadvertently disclosed

document. In light of the above discussion, we deny Nathan’s motion.

11

does not apply; and that Gundacker should have obtained the information he sought

through the normal channels of discovery.8

Finally, Gundacker and Nathan appeal the district court’s assessment of

sanctions. Because a notice of appeal had already been filed in this case, we must first

determine whether the district court had jurisdiction to assess sanctions. Generally, a

notice of appeal divests the district court of jurisdiction. See Liddell v. Board of Educ.,

73 F.3d 819, 822 (8th Cir. 1996) (citations omitted). Nevertheless, because the issue

of sanctions was not before this court at the time Gundacker originally appealed, the

district court properly decided whether sanctions were appropriate. See Perkins v.

General Motors Corp., 965 F.2d 597, 599 (8th Cir. 1992) (citations omitted) (because

sanctions are collateral to the merits of the case, sanctions may properly be considered

by the district court even when the merits are no longer before it).

The district court assessed sanctions under 28 U.S.C. § 1927 and Federal Rule

of Civil Procedure 16(f), which we review for an abuse of discretion. See Hill v. St.

Louis Univ., 123 F.3d 1114, 1121 (8th Cir. 1997) (citation omitted). Under § 1927, we

must determine whether the district court abused its discretion in making the
 Under § 1927, 9

[a]ny attorney or other person admitted to conduct cases in any court of

the United States . . . who so multiplies the proceedings in any case

unreasonably and vexatiously may be required by the court to satisfy

personally the excess costs, expenses, and attorneys’ fees reasonably

incurred because of such conduct.

28 U.S.C. § 1927.

 Rule 16(f) states: 10

If a party or party’s attorney fails to obey a scheduling or pretrial order,

or if no appearance is made on behalf of a party at a scheduling or pretrial

conference, or if a party or party’s attorney is substantially unprepared to

participate in the conference, or if a party or party’s attorney fails to

participate in good faith, the judge, upon motion, or the judge’s own

initiative, may make such orders with regard thereto as are just, and

among others any of the orders provided in Rule 37(b)(2)(B), (C), (D).

In lieu of or in addition to any other sanction, the judge shall require the

party or the attorney representing the party or both to pay the reasonable

expenses incurred because of any noncompliance with this rule, including

attorney’s fees, unless the judge finds that the noncompliance was

substantially justified or that other circumstances make an award of

expenses unjust.

Fed. R. Civ. P. 16(f).

12

objective finding that Nathan unreasonably and vexatiously multiplied the proceedings.9

See O’Connell v. Champion Int’l Corp., 812 F.2d 393, 395 (8th Cir. 1987). 

Under Rule 16(f), we must decide whether, in assessing sanctions, the district 10

court abused its discretion in finding that Gundacker and Nathan failed to obey a pretrial

order and generally failed to participate in good faith. We must also determine
 In light of the above discussion, we also conclude that the district court did not

11

abuse its discretion in ordering that Nathan be publicly admonished in an order to be

filed with the National Lawyer Regulatory Data Bank of the American Bar

Association’s Center for Professional Responsibility. 

 Because Nathan and Gundacker are no longer jointly liable for the sanctions

12

assessed against them, the district court should determine what level of sanctions

against Nathan are appropriate. We note that we do not disturb the district court’s

individual assessment of costs and fees against Nathan to be paid to Unisys under 28

13

whether, in exercising its inherent powers, the district court appropriately assessed

punitive sanctions against Gundacker and Nathan under Rule 16(f). 

The record is clear that Nathan unreasonably and vexatiously multiplied the

proceedings and generally acted in bad faith. He disobeyed court orders, violated his

duty as an officer of the court by making false representations, spoke to at least one

member of the press concerning this and an ongoing, sealed qui tam action, and made

various threats directed at the court. The assessment of sanctions against Nathan was

certainly appropriate.11

We are not convinced, however, that Gundacker should be sanctioned because

of Nathan’s reckless behavior. Having carefully reviewed the record, we believe that

it was an abuse of discretion to assess sanctions against Gundacker. At worst,

Gundacker did not prevent his lawyer from acting recklessly, and we will not impute

liability to Gundacker because his attorney decided to “run wild.” 

III.

We affirm the district court’s grant of summary judgment and finding that the

inadvertently disclosed document was privileged, reverse any sanctions levied against

Gundacker, and remand for a proper determination of monetary sanctions against

Nathan in light of our above discussion.12
U.S.C. § 1927.

14

A true copy.

Attest.

CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.