Doe YZ v. Shattuck-St. Mary's School

Citations: 214 F. Supp. 3d 763; 2016 WL 5858641Docket: Civil No. 15-1151 ADM/SER, Civil No. 15-1154 ADM/SER, Civil No. 15-1155 ADM/SER

Court: District Court, D. Minnesota; October 5, 2016; Federal District Court

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On July 18, 2016, oral arguments were heard regarding Shattuck-St. Mary’s School’s Motion for Summary Judgment and Motion to Exclude Expert Testimony from Charol Shakeshaft, as well as Plaintiffs’ Objection to a Magistrate Judge's denial of their Motion to Amend Complaints to include a claim for punitive damages. The cases involve allegations of sexual abuse by former teacher Lynn Seibel, occurring approximately fifteen years prior, with Plaintiffs seeking to hold Shattuck liable under negligence theories.

Shattuck is a private school in Minnesota for grades 6-12, where most students reside on campus under the supervision of dorm parents, who are Shattuck staff. The Plaintiffs—Doe AB, Doe XY, and Doe YZ—were students who lived in Whipple Hall, where Seibel was a dorm parent and later a study hall proctor. Seibel began at Shattuck in 1992 as a drama teacher and had prior misdemeanor convictions, including one for lewd conduct. He became well-liked among students, known for being approachable, but there were concerns about his permissiveness in allowing students to leave the dorm after curfew.

Shattuck's Motion for Summary Judgment and the Motion to Exclude Shakeshaft’s testimony were both denied. The Court partially sustained and partially overruled the Plaintiffs’ Objection to the Magistrate Judge's Order.

Doe YZ testified that under Seibel's leadership, students felt they could act freely if they were favored by him. Seibel was regarded as a campus celebrity, known for singing the national anthem and announcing hockey games, and he had roles in films like "Embrace the Vampire" and "Mighty Ducks 3." In "Embrace the Vampire," he served as location manager and portrayed a professor, although he later claimed ignorance of the film's explicit content during its approval process.

Seibel exhibited inappropriate behavior as a dorm parent, sharing personal sexual stories with students, inquiring about their sex lives, and promoting activities involving nudity, such as streaking and naked dance parties in the dorm's basement. At these parties, students engaged in sexually suggestive behaviors while Seibel observed. He also frequently entered bathrooms while students were showering, encouraging groups to gather and advising them on personal grooming.

In a separate context, referred to as "AP drama class," Seibel misled students into believing he could help them with penis enlargement. During these sessions, students watched pornography and were instructed by Seibel on sexual exercises, during which he measured their genitals and discussed size comparisons. Seibel concealed his true intentions for sexual gratification, presenting himself as a trustworthy figure and grooming students to discuss their sexuality openly. He approached these sessions in a clinical manner to maintain legitimacy.

Seibel's strategies were perceived by students as being for their benefit rather than for his sexual gratification. Concerns about his inappropriate conduct were raised as early as 1996, with student Scott Ewing reporting to dorm parent Jay Long that Seibel disliked him for not participating in nudity. Ewing later expressed to dorm parent Michael Cleary that he and other students felt singled out compared to hockey players, but their concerns were dismissed. In the 1999-2000 school year, a male student reported to dorm parent Max Prokopy that Seibel had discussed penis enlargement techniques with him. Prokopy, having never been trained on mandatory reporting, did not escalate the issue. Additionally, a student identified as “W3” informed advisor Charlene Krenzke about Seibel hosting naked dance parties and inappropriate touching; Krenzke, lacking training on handling such reports, did not relay this information to the headmaster. Seibel later testified that William Scheel, then president of the board of trustees, confronted him about W3’s allegations, to which Seibel admitted to holding the classes and was told to cease them. In late 2000, dorm parent Hedderick witnessed a naked dance party, finding numerous naked boys in the shower area, with Seibel present and fully clothed, downplaying the situation by stating the boys were just blowing off steam.

Hedderick informed Headmaster Kieffer about witnessing naked dance parties involving dorm parent Lynn Seibel, leading Kieffer to express prior awareness of the situation. Despite Hedderick's complaints regarding Seibel's continued employment, Kieffer directed upper school head John Nelson and dean of students Corby Smith to investigate, resulting in the conclusion that it was merely students "goofing off." Following this, the basement shower area in Whipple was locked. Kieffer later acknowledged that someone confronted Seibel about the parties, while Seibel admitted to being questioned by Kieffer on two occasions regarding student nudity. Seibel noted that other staff members were aware of the parties and had expressed disapproval.

In late May 2001, former student W3 returned to Shattuck and reported to admissions staffer Molly Gilbert concerning abusive behaviors, including drug and alcohol abuse in the dorms and pressure from faculty, including Seibel, to cover up such activities. W3 alleged that Seibel conducted inappropriate AP classes on penis enlargement, during which Seibel exposed himself and sexually touched multiple students. W3 claimed students manipulated Seibel into allowing their misconduct by threatening legal action. Gilbert documented W3's nervousness about reporting these sensitive issues and, after their conversation, consulted with director of alumni affairs Sonja Johnson and the school nurse for guidance on reporting these allegations to authorities.

Jones contacted Lynn Redmond, director of student services, after learning of W3’s report and arranged a meeting with Headmaster Kieffer. Local police informed Jones that due to a legal change, private schools were now responsible for investigating abuse reports. During the meeting on June 7, Jones recommended that Shattuck retain legal counsel due to unresolved questions, including prior knowledge of the situation by staff member Dallas Musselman.

Headmaster Kieffer acknowledged that there were significant concerns regarding Seibel's conduct and subsequently retained attorneys Doug Christensen and Holly Eng from Dorsey, Whitney LLP. When the attorneys contacted local police, they learned, like Jones, that no investigation would be conducted. The Dorsey firm initiated its own investigation into the allegations against Seibel.

Kieffer disclosed to Christensen and Eng various concerning behaviors exhibited by Seibel, including lax enforcement of school rules and rumors of inappropriate activities among students. Kieffer also recounted W3's concerns about Seibel's negligence after a drama trip where students misbehaved. 

During the investigation, Gilbert expressed feeling pressured by the attorneys, who questioned the validity of the allegations against Seibel. Despite repeated attempts, W3 declined to cooperate with the investigation, warning Kieffer of potential legal action if they continued to pursue him. Kieffer decided to interview the students identified by W3 personally, believing they would be more comfortable speaking with someone they knew rather than the attorneys.

Kieffer's employment at Shattuck ended in June 2001, and the investigation into allegations involving Mr. Seibel did not progress until late August 2001 when Eng realized student interviews had not been conducted. Following Kieffer's departure, Scheel, the board president, undertook the interviews in September 2001, using questions prepared by Christensen and Eng. The interviews revealed mixed accounts about Seibel's behavior, with students reporting inappropriate discussions regarding penis enlargement but denying any direct sexual misconduct. Scheel concluded privately that something inappropriate occurred but publicly stated the interviews were inconclusive. A meeting on October 9, 2001, involving Christensen, Eng, Scheel, and interim headmaster Brown concluded that while troubling issues were raised, there was insufficient evidence for disciplinary action against Seibel. After confronting Seibel, who denied any wrongdoing but acknowledged discussing penis enlargement, he claimed the allegations stemmed from a known informant with a questionable background. Brown advised Seibel to avoid potentially misinterpreted conversations. Subsequently, Eng informed local police about the investigation, which was then closed.

Seibel ceased his role as a dorm parent and moved out of Whipple months before the end of the 2000-2001 school year. There is conflicting evidence regarding whether his departure was connected to a report made by a student, W3. In an email from Eng to Christensen dated August 20, 2001, it was noted that the investigation into Seibel's conduct was complete. During a meeting on October 9, 2001, Seibel stated that he moved out due to students' inappropriate inquiries, while in a 2012 police interview, he claimed he was compelled to leave by Brown. However, in his deposition, Seibel asserted that his move was voluntary and unrelated to the report. He remained employed at Whipple as a study hall proctor after relocating to a house on campus.

Following an incident concerning W3's report, Brown expressed concerns about Seibel's conduct in the AP drama class, suggesting that Seibel might need help. Seibel interpreted these comments as a signal that his employment was in jeopardy. In May 2003, pornography was discovered on Seibel's work computer during repairs, leading to an investigation by Brown, who initially confronted Seibel about the presence of the material. Seibel claimed students had accessed his computer. A forensic analysis revealed numerous pornography-related files, including potential child pornography. Despite the findings, Shattuck decided not to report the matter to authorities after consulting with Christensen.

Subsequently, Shattuck negotiated a confidential separation agreement with Seibel, granting him a $12,500 severance payment. Seibel's resignation letter, dated August 7, 2003, cited a return to his acting career. In June 2012, a report of criminal sexual conduct against Seibel from 2001 was made to the Faribault Police Department by a corrections officer. Investigations revealed multiple allegations from former students regarding Seibel's inappropriate behavior, leading to his arrest in Los Angeles on August 13, 2012. Seibel admitted to most of the allegations during questioning and was charged with multiple counts of criminal sexual conduct in Minnesota on October 8, 2012, ultimately pleading guilty on July 12, 2013.

Plaintiffs have initiated lawsuits against Shattuck, alleging negligence, negligent supervision, and negligent retention following Seibel's prosecution. Each plaintiff's experiences with Seibel differ significantly:

- **Doe AB** was a student at Shattuck during the 1999-2000 and 2000-2001 school years. Under Seibel's influence, he participated in inappropriate activities, including streaking and attending a naked dance party. Seibel repeatedly entered the bathroom while Doe AB was showering, making inappropriate comments about his body. In early 2000, during a drama session, Seibel touched Doe AB's genitals. Seibel faced criminal charges for his actions against Doe AB, who is identified as Victim #4, and pled guilty to one count of criminal sexual conduct.

- **Doe XY** attended Shattuck from 1998 to 2003, participating in naked dance parties while Seibel was present. Seibel also intruded during Doe XY's showers, making inappropriate comments. Doe XY sought advice from Seibel regarding penis enlargement exercises, which led to Seibel asking him to demonstrate. Doe XY was not initially recognized as a victim in the criminal complaint but reported to law enforcement shortly after Seibel's charges.

- **Doe YZ** attended Shattuck from 2000 to 2004. Although Seibel had moved out of the dorm, he continued to supervise as a study hall proctor and would watch students shower or engage in naked dance parties. Seibel made inappropriate comments about Doe YZ's appearance and coerced him into viewing pornography while masturbating, purportedly to provide guidance on sexual performance. Seibel also conducted inappropriate sexual activities during group sessions, including measuring and tracing Doe YZ's genitals. Seibel faced three counts of criminal sexual conduct for his abuse of Doe YZ, identified as Victim #6, and pled guilty to one count.

Shattuck's motion to exclude Charol Shakeshaft’s expert testimony is addressed prior to the motion for summary judgment, based on the argument that the Plaintiffs lack an admissible expert opinion regarding the foreseeability of Seibel's actions. The admissibility of expert testimony is governed by Rule 702 of the Federal Rules of Evidence, which requires that testimony be provided by a qualified witness and based on reliable principles and methods. Trial courts serve as "gatekeepers" to ensure the testimony is useful, the expert is qualified, and the testimony is trustworthy. The Daubert standard provides factors for evaluating reliability, including testability, peer review, known error rates, and general acceptance in the scientific community, though no single factor is decisive. The court generally favors admissibility when doubts arise, excluding only fundamentally unsupported opinions.

Shakeshaft, a professor with extensive experience in educational administration and a focus on educator sexual misconduct, was retained to provide expert opinions on the foreseeability of such misconduct and the adequacy of Shattuck’s policies and training related to sexual abuse prevention. Her expert report concludes that sexual misconduct is foreseeable and identifies deficiencies in supervision, investigation of complaints, training, and policy adherence.

Shakeshaft supplemented her report with an addendum detailing cases of sexual abuse in schools and reaffirming her initial conclusions. Shattuck challenges the admissibility of Shakeshaft’s testimony on three main grounds. First, Shattuck claims Shakeshaft lacks qualifications due to her academic background and insufficient legal experience regarding mandatory reporting requirements. However, Shakeshaft’s extensive experience in educator sexual misconduct, evidenced by numerous publications, presentations, and direct involvement in developing school policies, establishes her expertise under Federal Rule of Evidence 702. While she can testify about mandatory reporting statutes and related school policies, she cannot opine on whether Shattuck violated Minnesota’s mandatory reporting law, as that constitutes an inadmissible legal conclusion.

Second, Shattuck asserts that Shakeshaft’s opinions lack factual support and fail to address the specifics of each plaintiff's case. Although the credibility of an expert's opinion is generally a separate issue, it can be excluded if fundamentally unsupported. Shakeshaft’s conclusions are based on a comprehensive review of relevant documents, including pleadings, depositions, and school records. The minor factual inaccuracies pointed out by Shattuck affect credibility but not admissibility. Shakeshaft’s opinions are appropriately tailored to each plaintiff's case, distinguishing them from generalized assertions dismissed in prior cases. Her analysis is specific to Shattuck and the allegations against Seibel involving the plaintiffs identified as Doe AB, Doe XY, and Doe YZ.

Shake-shaft’s opinions regarding foreseeability of abuse remain consistent across three cases, indicating that if the earliest incidents of abuse were foreseeable, subsequent incidents would also be foreseeable. Distinctions made by Shattuck regarding sexual abuse versus misconduct, the age of victims, and variations in the standard of care over time are deemed suitable for trial consideration, not grounds for exclusion of testimony. Shattuck's objection to Shake-shaft’s testimony on policies and mandated reporting is countered by the relevance of these issues to foreseeability and breach of duty. Shake-shaft’s expertise is valuable in helping jurors understand the context of school handling of sexual abuse risks fifteen years prior.

Regarding summary judgment, it is suitable when no genuine material facts are in dispute and the moving party is entitled to judgment as a matter of law, per Fed. R. Civ. P. 56(a). Material facts are those influencing the suit's outcome, and genuine disputes are those that could lead to differing jury verdicts. Courts must view facts favorably for the nonmoving party, which must provide substantial evidence to show a genuine issue exists.

Count I of the negligence claim asserts that Shattuck had a duty to protect the Plaintiffs, based on in loco parentis and fiduciary relationships. Shattuck contends that Minnesota law does not support a general negligence claim against corporations for employee-related sexual abuse and argues it did not owe a duty of care to the Plaintiffs. Plaintiffs dispute this interpretation of Minnesota law and the nature of Shattuck’s duty. The argument references M.L. v. Magnuson, which involved similar claims against a pastor’s employer, indicating that claims for negligent hiring, retention, and supervision were appropriate for jury consideration under the standard of reasonable care.

The Minnesota Court of Appeals has emphasized the need for specific jury instructions in cases involving negligent hiring, retention, and supervision, as distinct causes of action related to employer liability for employee actions. The court affirmed that while these theories are recognized, they do not preclude general negligence claims against an employer based on relationships outside the employer-employee context. Plaintiffs argue their general negligence claims are grounded in an in loco parentis or fiduciary relationship rather than solely on employer liability. In loco parentis denotes an individual assuming parental responsibilities, which is applicable in this case as Shattuck, a boarding school, had a heightened level of control and oversight over its students compared to traditional schools. This unique relationship is supported by Shattuck’s policies that outline its responsibility for student welfare. Previous rulings, such as Doe 75 v. Diocese of St. Cloud, have established that negligence claims based on fiduciary duties can be separate from employment-related negligence. Therefore, the court found that the plaintiffs' in loco parentis-based claim possesses sufficient grounds to advance to trial, countering Shattuck's assertion of lacking a duty of care in this context. Minnesota law stipulates that a duty to protect arises when a special relationship exists and a third party's actions create foreseeable harm to the plaintiff.

A special relationship exists when one individual has custody over another, limiting the latter's ability to protect themselves. This relationship typically involves the plaintiff being particularly vulnerable and dependent on the defendant, who holds significant power over the plaintiff's welfare. In the case of Domagala v. Rolland, sufficient evidence suggests that Shattuck, as a boarding school, owed a legal duty to its students based on this special relationship, as it assumed responsibility for their welfare and enforced rules governing student conduct. 

Shattuck contends that the plaintiffs' claims of negligent supervision are barred by the statute of limitations, arguing that these claims derive from respondeat superior principles and should be measured from when each plaintiff turned 18. Since all plaintiffs were over 24 at the time they filed their suits, Shattuck claims the suits are time-barred. Conversely, the plaintiffs argue that negligent supervision and respondeat superior are legally distinct, which affects the statute of limitations since the Child Victims Act extends the limitations period for sexual abuse claims based on negligence, but not for those based on vicarious liability. 

Under Minnesota law, negligence claims typically have a six-year statute of limitations, which previously commenced when the plaintiff turned 18. Before 2013, the statute expired when the plaintiff turned 24. However, the Child Victims Act, enacted in 2013, amended the statute of limitations for sexual abuse-related claims.

The CVA established a three-year window for claims that were previously time-barred, specifically allowing individuals under 18 alleging sexual abuse to file actions for damages until May 25, 2016, despite prior statute limitations. This provision applies to various claims, including negligence, but excludes claims for vicarious liability or respondeat superior. Negligent supervision, while related to respondeat superior, is distinct as it considers the employer’s fault, which is not a factor in respondeat superior cases. Under respondeat superior, an employer is vicariously liable for employees' actions within the scope of employment, irrespective of the employer's fault, while negligent supervision holds the employer directly liable due to a failure to protect against employee misconduct.

The foreseeability requirement in negligence claims necessitates that the harm is predictable enough for a reasonable person to take precautions. Shattuck contends it is entitled to summary judgment, arguing that Plaintiffs cannot demonstrate foreseeability regarding Seibel’s conduct. However, the court disagrees, emphasizing that the elements of negligence include duty of care, breach, proximate causation, and injury, with foreseeability being integral to the duty of care. Foreseeability in this context is defined as a probability level that would prompt a prudent person to take precautions.

Courts assess the foreseeability of danger by evaluating whether the specific risk was objectively reasonable to anticipate, rather than merely conceivable. Sexual abuse is generally not regarded as foreseeable without prior similar incidents. Evidence indicates that the sexual abuse of students by teachers was recognized as a danger prior to the abuse of the plaintiffs. For instance, Minnesota enacted a child protection law in 1975 mandating the reporting of suspected abuse, and it was acknowledged in the mid-1980s that such abuse in schools was foreseeable. A trustee at Shattuck testified to having encountered teacher-student sexual abuse as early as 1968. Furthermore, there were multiple reports regarding Seibel's inappropriate behavior with students prior to the plaintiffs' abuse, communicated to high-ranking Shattuck officials.

Specific incidents included reports of Seibel encouraging students to engage in inappropriate activities and teaching them concerning sexual topics from 1996 to 2000. Shattuck disputes whether knowledge from dorm parents should be attributed to the administration to establish foreseeability, citing a case that emphasizes the relevance of school officials' knowledge. However, the court in that case acknowledged that evidence from non-official employees could contribute to the determination of foreseeability. Notably, dorm parents have a more significant role and greater interaction with students compared to other staff, which could support the argument that their knowledge is critical in assessing the risk of future abuse.

The document highlights the foreseeability of Seibel's misconduct based on multiple reports and observations by dorm parents and managerial employees at Shattuck. W3, a student, informed his advisor before graduating in Spring 2000 about Seibel's inappropriate behavior, including naked dance parties and inappropriate touching. Dorm parent Hedderick later witnessed Seibel watching naked boys in the shower, and when relaying this to Headmaster Kieffer, he expressed surprise that such behavior had not been addressed, suggesting prior knowledge of Seibel’s misconduct. W3 further disclosed in May 2001 that Seibel had exposed himself and sexually touched students during drama classes, to which Kieffer acknowledged the presence of "red flags" regarding Seibel's behavior. Despite these reports, Shattuck contended that the abuse was not objectively foreseeable.

The document references the case Doe 175, where the Minnesota Court of Appeals dismissed the plaintiff's claims, concluding that the evidence did not sufficiently indicate sexual abuse. Similarly, in L.M v. Karlson, the Court affirmed summary judgment for the defendant based on insufficient evidence of foreseeability concerning the abuser's actions despite prior complaints about verbal and physical behavior. Both cases illustrate a judicial standard requiring substantial evidence connecting observed behaviors to the potential for sexual abuse to establish foreseeability.

The case at hand presents significant differences from precedents Doe 175 and Karlson, particularly regarding the evidence of sexual misconduct by Seibel. Unlike Karlson, where there was no warning of abuse, Shattuck employees reported witnessing Seibel with naked boys and he acknowledged the existence of naked dance parties, indicating that his sexual intentions were obscured rather than hidden. The behaviors attributed to Seibel, such as encouraging high school students to dance naked and discussing sexual topics, are clear indicators of inappropriate conduct, making the abuse of Plaintiffs Doe AB and Doe XY foreseeable. 

In the case of Doe YZ, who was abused between October 2001 and June 2003, additional evidence strengthens the foreseeability claim, including a report from May 2001 detailing instances of sexual touching by Seibel and a warning from Headmaster Kieffer about Seibel's troubling behavior. 

Shattuck argues for summary judgment by claiming no breach of duty occurred in its supervision of Seibel. However, negligence claims necessitate proving a duty of care was breached and that this breach caused the injury. A negligent retention claim arises when an employer knows or should know of an employee's unfitness and fails to act. In the case of Doe AB and Doe XY, evidence suggests Shattuck was aware of Seibel's inappropriate actions yet allowed him to continue working as a dorm parent. Reports of naked dance parties led to insufficient responses, such as merely instructing Seibel to stop or restricting access to showers, while he continued to reside among students, indicating a failure to appropriately address the allegations against him. A reasonable juror could conclude that Shattuck's actions were inadequate given the seriousness of the situation.

Shattuck opted to limit access to the location of Seibel's inappropriate behavior instead of taking more decisive actions, such as removing him or restricting his access to students. A jury could find Shattuck's response inadequate if it determines that Shattuck was aware of Seibel's misconduct. Although Shattuck claims its immediate investigation into W3's report was reasonable, the plaintiffs' expert contests this, citing a nearly four-month delay before interviewing the alleged victims and a lack of thoroughness in the investigation. During this investigatory period, Seibel continued to have access to students, raising questions about the reasonableness of Shattuck's response.

Negligent supervision is defined as the failure of an employer to adequately oversee an employee to prevent foreseeable misconduct. Expert analysis indicates Shattuck did not sufficiently supervise Seibel after reports of his inappropriate behavior surfaced. Shattuck failed to train employees on recognizing or reporting suspected abuse, resulting in confusion among staff regarding their responsibilities. Evidence suggests that Shattuck did not increase supervision of Seibel despite knowledge of his misconduct, allowing him to remain unsupervised around students.

In comparison to a previous case where a negligent supervision claim was dismissed due to regular oversight of the abuser, the current situation reveals a lack of similar oversight for Seibel, evidenced by incidents where he was alone with students. Therefore, there is substantial evidence for a jury to conclude that Shattuck breached its duty of supervision. Lastly, Shattuck contends that it deserves summary judgment due to a lack of evidence of compensable damages from the plaintiffs.

Plaintiffs' claims for negligent retention or supervision are challenged by Shattuck on the grounds that they solely allege emotional abuse, lacking any physical injury, which is necessary to sustain such claims. Relevant case law establishes that a threat or reasonable apprehension of actual physical injury is required. A genuine issue of material fact exists regarding the lack of physical injury, particularly concerning Doe XY, who was involved in an incident deemed potentially criminal sexual conduct, thus confirming the presence of physical injury as recognized by the Minnesota Supreme Court. 

In contrast, allegations from Doe YZ and Doe AB detail explicit instances of sexual abuse, including unwanted touching and solicitation of masturbation, which satisfy the criteria for physical injury under Minnesota statutes on sexual abuse. 

Additionally, Plaintiffs object to the denial of their motion to amend the complaint to include punitive damages, arguing that the magistrate judge applied an incorrect standard of review and failed to recognize the knowledge of Shattuck employees as pertinent. They also seek reconsideration based on new testimony from a former student. The legal standard for reviewing the magistrate's order is highly deferential, requiring a clear error or misapplication of law to overturn the decision.

Plaintiffs contend that Judge Rau’s Order is erroneous, asserting they have met the burden for adding punitive damages. They argue that Judge Rau employed an overly stringent standard in determining whether Shattuck acted with deliberate disregard for the rights or safety of others, a determination they believe should be left to the jury. According to the standard articulated in Minnesota law, to claim punitive damages, plaintiffs must provide clear and convincing evidence that the defendant acted with deliberate disregard, as outlined in Healey v. I-Flow, LLC. Judge Rau evaluated the evidence and concluded it did not clearly establish Shattuck's deliberate indifference. Plaintiffs argue Judge Rau should not have made this determination, but must assess if a reasonable juror could find clear evidence of Shattuck's awareness of facts indicating a high probability of harm to plaintiffs. 

Additionally, Plaintiffs challenge Judge Rau’s refusal to impute the knowledge of non-managerial employees to Shattuck, asserting that under Minnesota law, corporations are charged with constructive knowledge of facts known by their employees acting within their authority. This principle is supported by Travelers Indem. Co. v. Bloomington Steel. Supply Co. Overall, Plaintiffs maintain that Judge Rau misapplied the law regarding punitive damages and the knowledge imputation of employees.

Minn. Stat. 549.20, subd. 2(3) stipulates that punitive damages can only be awarded against a principal for actions of an agent if the agent is a managerial employee authorized to make policy and planning decisions while acting within their employment scope. Judge Rau determined that Krenzke, Prokopy, and Hedderick lack such authority at Shattuck, meaning their knowledge can be attributed to Shattuck for negligence but not for punitive damages. This aligns with the precedent set in Baufield v. Safelite Glass Corp., which holds that statements from non-supervisory employees cannot be used to impose punitive liability on an employer.

Ewing's recent testimony about reporting inappropriate behavior to dorm parents will not be considered for punitive damages, as neither he nor the dorm parents had decision-making authority. For plaintiffs Doe AB and Doe XY, who were abused before May 2001, the court found insufficient evidence to suggest Shattuck deliberately disregarded their safety, thus they cannot plead for punitive damages. 

Conversely, Doe YZ has a stronger case for punitive damages. Prior to Doe YZ's abuse, Shattuck received substantial evidence indicating Seibel's inappropriate conduct. The headmaster acknowledged the "red flags" regarding Seibel's behavior. Following W3's report in May 2001, the lack of diligence in notifying authorities and the inadequacy of the Dorsey investigation raised concerns. Testimonies indicated that the investigation may have been biased, and there were indications that other students had information about Seibel's behavior that was not pursued. Thus, the context suggests a troubling awareness of Seibel's actions within the dormitory environment.

Scheel's interviews indicated that an incident involving Seibel occurred, but the students were reluctant to provide information. Interim headmaster Brown noted that Seibel had issues that warranted professional help. Despite this knowledge, Shattuck allowed Seibel continued access to students after giving him only a verbal reprimand. Though his role as a dorm parent ended, Seibel remained employed as a study hall proctor without evidence of restricted or supervised interactions with students. This situation presents clear and convincing evidence that Shattuck may have deliberately ignored Doe YZ's rights and safety, allowing Doe YZ to pursue punitive damages. The court ordered the denial of Shattuck-St. Mary’s School’s motions for summary judgment and to exclude expert testimony, while partially sustaining and overruling plaintiffs’ objections to a previous order regarding punitive damages claims. Plaintiffs use pseudonyms due to the sensitive nature of the alleged sexual abuse, which occurred while they were minors. The court emphasized that summary judgment motions require viewing facts favorably for the nonmoving party. Testimony from W3 regarding Seibel’s investigation was limited, and his reluctance to cooperate stemmed from concerns about confidentiality agreements with Shattuck's attorneys.

Collins, a representative of the Faribault Police Department, stated in 2012 that he had no recollection of receiving any communications or complaints regarding sexual misconduct at Shattuck from Dorsey attorneys. Investigators found no evidence from local law enforcement or child protection agencies indicating that Shattuck or Dorsey reported any issues concerning Seibel. A "lights-out incident" is referenced in a 2016 Memorandum Opinion and Order related to the case Doe XY v. Shattuck-St. Mary’s School. Reports on the incident are mostly similar, with the Doe AB report being more detailed. Shattuck contends that an addendum to the report should be disregarded for being untimely and lacking the required signature from Shakeshaft. However, the court finds that the addendum's late submission is not overly harsh and aligns with Rule 26(e) of the Federal Rules of Civil Procedure, which allows for supplemental disclosures up to 30 days before trial. Additionally, the lack of Shakeshaft's signature does not invalidate the addendum since authorship is clear and undisputed. Shattuck criticized Shakeshaft for relying on Doe XY’s deposition without reviewing Doe YZ’s deposition prior to her report. The court determined this reliance was justifiable due to the similar circumstances of the cases, and Shakeshaft had to rely on available documents since Doe YZ had not yet been deposed. The relevance of prior abuse cases supports the foreseeability of Doe YZ’s situation. The document also references a Minnesota Court of Appeals case that reversed a summary judgment for a defendant on negligent retention claims, indicating that corporations can act in loco parentis, contrary to Shattuck's claims regarding the applicability of this doctrine to schools.

A claim for negligent retention holds an employer liable if they become aware or should have been aware of an employee's problems indicating unfitness during employment. The legal standard requires that potential abuse could have been anticipated. In this case, W3’s report relates only to Doe YZ’s claims since it occurred after Seibel's abuse of Doe AB and Doe XY. Karlson's vague references to “inappropriate comments” lack sufficient detail. Prior to the abuse of any plaintiff, Minnesota law mandated reporting suspicions of sexual abuse. There is conflicting evidence regarding whether Shattuck reported suspected abuse involving Seibel. Some Shattuck employees and Dorsey lawyers stated they tried to report but were told they were not responsible for private schools. Conversely, Collins from the Faribault Police Department has no recollection of receiving any complaints about sexual misconduct at Shattuck or being contacted by Dorsey Whitney Law Firm regarding such allegations. Additionally, BCA agent Scott Mueller testified about a lack of communication between Shattuck and law enforcement.