Rundell Fletcher, Appellant, vs. St. Paul Pioneer Press, d/b/a Northwest Publications, Inc., Respondent.

may not be cited except as provided by

Minn. Stat. § 480 A. 08, subd. 3 (1996).

 STATE OF MINNESOTA

 IN COURT OF APPEALS

   C3-97-1765

Rundell Fletcher,

Appellant,

vs.

St. Paul Pioneer Press,

d/b/a Northwest Publications, Inc.,

Respondent.

 Filed May 5, 1998

 Affirmed in part, reversed in part, and remanded

 Mansur, Judge*

Ramsey County District Court

File No. C1941373

Stephen W. Cooper, Stacey R. Everson, Kathryn J. Cima, The Cooper Law Firm, Chartered, 4747 First Bank Place, 601 Second Avenue South, Minneapolis, MN 55402 (for appellant)

Carol A. Ellingson, Bend & Ellingson, P.A., St. Paul Building, Suite 700, 6 West Fifth Street, St. Paul, MN 55102-1420 (for respondent)

Laura J. Davis, Employee Relations/Labor Counsel, St. Paul Pioneer Press, 345 Cedar Street, St. Paul, MN 55101 (for respondent)

*Retired judge of the district court, serving as judge of the Minnesota Court of Appeals by appointment pursuant to Minn. Const. art. VI, § 10.

Considered and decided by Toussaint, Chief Judge, Klaphake, Judge, and Mansur, Judge.

U N P U B L I S H E D O P I N I O N

Appellant challenges the trial court's ruling that he failed to prove reprisal and hostile work environment discrimination, and alleges that the trial court committed factual and evidentiary errors that justify reversal of judgment. We affirm in part, reverse in part, and remand.

FACTS

In January 1988, respondent Pioneer Press hired appellant Rundell Fletcher, an African-American male, as a journeyman pressman in its production facility. Respondent soon learned that appellant had lied about his qualifications for the journeyman position, and demoted him to an apprentice position.

In January 1991, respondent promoted appellant to a journeyman position. In March 1991, appellant was laid off. Appellant returned to the pressroom as a journeyman for one shift in July 1991. In June 1992, respondent hired appellant as a presswiper. This position paid substantially less than a journeyman pressman position, and did not give appellant the right to move into an apprentice or journeyman position.

On August 20, 1992, appellant had a heated verbal conflict with Arthur Miller, his supervisor, that culminated when Miller told appellant he would be fired if he did not come to work the next day and called appellant a "dumb f---ing nigger." Two other employees witnessed the incident. After appellant complained, respondent investigated the incident and interviewed both witnesses, who confirmed that Miller made the remark.

Respondent concluded that, while Miller's conduct was a serious violation of company policy and he should not continue in a supervisory position, termination was too severe a sanction because the incident occurred in the context of an argument, there had never been a prior similar incident, and Miller had been an employee for 25 years. Respondent gave Miller a number of disciplinary options, and Miller chose to be demoted to a journeyman position. Respondent suspended Miller for ten days without pay. Miller's demotion cost him his journeyman seniority, adversely affected his shift choice, and reduced his fringe benefits.

Appellant objected to Miller's demotion, arguing that it deprived him of an opportunity to apply for the next journeyman opening. Respondent told appellant that he had no right to a journeyman job, but could apply for future journeyman openings. Appellant continued to work as a presswiper following the incident with Miller.

In June 1993, respondent hired appellant as its 40th journeyman. In November 1993, respondent laid off appellant when two senior journeymen returned after extended leaves. In May 1994, respondent rehired appellant as a journeyman. In November 1995, respondent fired appellant for his absenteeism on two scheduled work days and for being dishonest regarding his whereabouts on those days.

After the incident with Miller, appellant began a civil suit against respondent alleging racial harassment and reprisal under the Minnesota Human Rights Act, as well as negligent supervision. The trial court granted summary judgment in favor of respondent and dismissed appellant's complaint. On appeal, we affirmed the trial court's dismissal of the negligence claim, but reversed summary judgment on the harassment and reprisal claims and remanded the case. Fletcher v. St. Paul Pioneer Press, No. C7-95-2 (Minn. App. June 27, 1995), review denied (Minn. Aug. 30, 1995). After a bench trial, the court found in favor of respondent on all claims. This appeal followed.

D E C I S I O N

A trial court's findings of fact "shall not be set aside unless clearly erroneous, and due regard shall be given to the opportunity of the trial court to judge the credibility of the witnesses." Minn. R. Civ. P. 52.01. However, this court does not defer to a trial court's decision on a purely legal issue. Frost-Benco Elec. Ass'n v. Minnesota Pub. Utils. Comm'n, 358 N.W.2d 639, 642 (Minn. 1984).

1. Reprisal Discrimination

The Minnesota Human Rights Act prohibits reprisal discrimination. Minn. Stat. § 363.03, subd. 7 (Supp. 1997). The U.S. Supreme Court has developed a three-part analysis to determine whether an employee has been subjected to unlawful employment discrimination. McDonnell Douglas Corp. v. Green, 411 U.S. 792, 802-04, 93 S. Ct. 1817, 1824-1825 (1973); Danz v. Jones, 263 N.W.2d 395, 399 (Minn. 1978) (McDonnell Douglas factors used to analyze Minnesota Human Rights Act claims).

First, an employee must establish a prima facie case of discrimination. McDonnell Douglas, 411 U.S. at 802, 93 S. Ct. at 1824. To establish a prima facie case of reprisal discrimination, the employee must prove: "(1) statutorily-protected conduct by the employee; (2) adverse employment action by the employer; and (3) a causal connection between the two." Hubbard v. United Press Int'l, Inc., 330 N.W.2d 428, 444 (Minn. 1983). Here, the trial court found that appellant failed to establish a prima facie case of reprisal discrimination. But there is evidence of adverse employment action by respondent against appellant.

According to respondent's assistant production director, respondent was considering hiring an additional journeyman before the incident with Miller occurred, but Miller's demotion into the position essentially filled the anticipated need. As a result, appellant's chance of being promoted to that journeyman position was denied. Thus, appellant established a prima facie case of reprisal discrimination by showing that respondent took adverse employment action against him.

Once appellant has established a prima facie case of reprisal discrimination, the burden shifts to respondent to articulate a legitimate, nondiscriminatory reason for its actions. McDonnell Douglas, 411 U.S. at 802, 93 S. Ct. at 1824. After an employer has articulated a legitimate nondiscriminatory reason for its actions, the employee must then prove that the proffered reason is a pretext for discrimination or not otherwise worthy of belief. Id. at 804, 93 S. Ct. at 1825. Here, the trial court found that by demoting Miller, respondent did not intend to take adverse action against appellant or retaliate against him for complaining of Miller's conduct, but was instead attempting to take appropriate remedial action in good faith. We disagree.

According to respondent's vice president of human resources, respondent was aware of appellant's wish to become a journeyman, and knew that its action in demoting Miller would preclude appellant from consideration for the position because only 38 journeymen positions were guaranteed under the union contract. Since Miller occupied the 39th position, respondent knew that Miller's demotion would make replacement of the next person that retired or left for any reason unnecessary. Miller's demotion negatively impacted appellant as the complaining party by preventing him from moving into a journeyman position. Further, respondent allowed Miller to select demotion, which was one of several disciplinary alternatives offered by respondent.

We conclude that respondent knew appellant was waiting for a journeyman position to become available, and intentionally deprived him of an opportunity to apply for that position by demoting Miller to the journeyman level. The trial court erred by concluding that appellant failed to prove that respondent's disciplinary action against Miller was a pretext for discrimination against appellant.

2. Hostile Work Environment

The Minnesota Human Rights Act prohibits racial discrimination that creates a hostile work environment. Minn. Stat. § 363.03, subd. 1 (1996). The three-part McDonnell Douglas analysis is used to determine whether an employee was subjected to such discrimination. Minneapolis Police Dep't v. Minneapolis Comm'n on Civil Rights, 402 N.W.2d 125, 131 (Minn. App. 1987), aff'd, 425 N.W.2d 235 (Minn. 1988).

To establish a prima facie case of hostile work environment, an employee must prove

first, that he belongs to a protected group; second, that he was subjected to unwelcome racial harassment which had the purpose or effect of unreasonably interfering with the terms, conditions, or privileges of his employment; and third, that [the employer] knew or should have known of the harassment in question and failed to take prompt action.

 Williams v. Metropolitan Waste Control Comm'n, 781 F. Supp. 1424, 1426 (D. Minn. 1992). In this case, the first two elements of appellant's prima facie case are relatively undisputed. But the trial court found that appellant did not establish the third element of the prima facie case because respondent took appropriate and timely remedial action after learning of the incident with Miller.

The record supports the trial court's conclusion. There is no evidence of prior race-related conduct or complaints about Miller, and interviews with other pressroom employees showed no evidence of racial tension in the pressroom. The trial court found that although there may have been occasional use of racial terms or jokes in the pressroom, the problem was not severe or pervasive and respondent did not tolerate the use of ethnic or racial slurs by employees or supervisors. Respondent implemented appropriate policies and took other actions to prevent racial harassment before and after the incident. Respondent also took prompt action to resolve the situation with Miller by starting an investigation the day after the incident and implementing remedial actions within two weeks of the incident. Respondent demoted Miller and conducted diversity training for all pressroom employees. The record supports the trial court's conclusion that appellant failed to establish the existence of a hostile work environment.

We conclude that respondent's action in demoting Miller into a journeyman position, thereby forestalling appellant's opportunity for advancement, constitutes unlawful reprisal discrimination under the Minnesota Human Rights Act. We remand to the trial court for appropriate relief. In determining damages, the trial court may examine the record or take additional testimony as it deems appropriate. Due to our ruling, we need not address other assignments of error alleged by appellant.

  Affirmed in part, reversed in part, and remanded.