Susan Ackerman v. State of Iowa, Iowa Workforce Development, Teresa Wahlert, Teresa Hillary, and Devon Lewis
Susan Ackerman v. State of Iowa, Iowa Workforce Development, Teresa Wahlert, Teresa Hillary, and Devon Lewis
Opinion of the Court
*613A state administrative law judge (ALJ) was terminated shortly after giving unfavorable testimony about the director of her division to the Iowa Senate Government Oversight Committee. The ALJ, whose employment was covered by a collective bargaining agreement (CBA), brought a lawsuit against the State of Iowa, the division, and several named defendants, alleging, among other claims, wrongful termination in violation of public policy. The State moved to dismiss the claim, arguing the common law claim of wrongful discharge is reserved for at-will employees. The district court granted the State's motion. The ALJ appealed, and we transferred the case to the court of appeals. The court of appeals reversed, concluding contract employees may bring common law wrongful-discharge claims. We granted the State's application for further review. For the reasons set forth below, we find that retaliatory discharge claims are not categorically reserved for at-will employees.
I. Factual Background and Proceedings.
Under the procedural posture of this case, we accept the well-pleaded facts as the factual background to examine the legal issues presented on appeal. See Hedlund v. State ,
Susan Ackerman served as an ALJ for the Iowa Workforce Development (IWD). She worked in the unemployment insurance appeals bureau. Ackerman began her service as an ALJ in 2000 and was covered by a CBA between the State of Iowa and the American Federation of State, County, and Municipal Employees. The CBA provided that employees may not be suspended, disciplined, or discharged without proper cause. The contract also protected employees from adverse employment actions taken in retaliation for whistleblowing. The agreement further provided for a grievance procedure.
In 2011, Teresa Wahlert was appointed as director of the IWD by a newly elected governor of Iowa. She subsequently terminated the bureau's chief ALJ and appointed Teresa Hillary and Devon Lewis as the lead workers of the bureau. Over time, Ackerman believed Wahlert, with the aid of Hillary and Lewis, engaged in systematic efforts to pressure the ALJs in the bureau and other employees to render decisions favorable to employers. She also believed that judges who failed to render decisions favorable to employers were subjected to harassment.
In August 2014, Ackerman was subpoenaed to testify about her beliefs and observations before the Iowa Senate Government Oversight Committee. At the hearing, she testified about a hostile work environment and the pressure she perceived by Wahlert to issue decisions in favor of employers. She said she felt powerless to stop Wahlert from improperly influencing the decisions issued by the bureau.
In December 2014, Wahlert suspended Ackerman, pending an investigation into allegations of misconduct. Ackerman believed that the allegations were baseless and that her suspension was done in retaliation for providing truthful testimony to the senate committee.
In January 2015, Ackerman was terminated from her employment. She subsequently filed a lawsuit against IWD, Wahlert, Hillary, and Lewis. In her petition, she alleged the defendants (1) retaliated against her for disclosing information to public officials in violation of Iowa Code section 70A.28 (2015); (2) defamed her; (3) intentionally interfered with contractual relations; (4) breached the State of Iowa's *614Manager and Supervisors Manual, of which she is a third-party beneficiary; (5) disclosed confidential personnel records in violation of Iowa Code section 22.7 ; (6) violated her constitutional rights under the First Amendment; (7) intentionally inflicted emotional distress, and (8) wrongfully discharged her in violation of public policy.
The defendants subsequently moved to dismiss the common law retaliatory discharge claim in count VIII. The defendants solely argued that the claim is reserved for at-will employees, and because Ackerman's employment was covered by a CBA, she could not bring the claim. The district court agreed and dismissed the claim, concluding "[t]o the extent that the agreement provides for a remedy relating to wrongful discharge, Plaintiff is not allowed to apply the narrow exception Iowa courts have reserved for at-will employment to her current situation."
Ackerman appealed and the court of appeals reversed. The court explained that although the common law action of retaliatory discharge is available to at-will employees and indeed has been recognized as an exception to the at-will employment doctrine, such availability does not categorically foreclose recognizing the tort for contract employees. The court found the tort was adopted to protect those with a compelling need for protection from wrongful or retaliatory discharge, and CBA-covered employees indeed require such protection. Accordingly, the court concluded that Ackerman's status as a CBA-covered employee did not preclude her wrongful-discharge claim. We granted defendants' application for further review.
II. Standard of Review.
We review district court orders "granting a motion to dismiss for correction of errors at law." Berry v. Liberty Holdings, Inc. ,
III. Analysis.
A. Development of Common Law. The resolution of this case ultimately rests upon "our duty to develop and announce the common law" when resolving disputes. Thompson v. Stearns Chem. Corp. ,
B. Development of the Retaliatory Discharge Tort. Thirty years ago, we utilized our authority to recognize the common law tort of retaliatory discharge in violation of public policy in Springer v. Weeks & Leo Co. ,
In Springer , we found that our state recognized a public policy for workers to seek compensation for work-related injuries.
On the heels of Springer , we were presented with the question in Conaway v. Webster City Products Co. ,
Since Springer and Conaway , our cases that have examined the retaliatory discharge tort have largely focused on the search for a well-defined public policy to support the application of the tort beyond the circumstances of retaliation for filing for workers' compensation benefits. Generally, these cases have expanded the tort into four categories of protected activity. See Jasper v. H. Nizam, Inc. ,
C. Whether Contract Employees May Bring Common Law Retaliatory Discharge Claims. The sole question presented to the district court and raised on appeal is one of first impression: whether the tort of wrongful discharge in violation of public policy is categorically reserved for at-will employees, such that a contract employee may not state a claim.
Since Springer and Conaway , we have considered many retaliatory discharge *616claims brought by at-will employees. While engaging in our public-policy analysis, we have frequently described the remedy for retaliatory discharge as an exception to the at-will employment doctrine. See Jones v. Univ. of Iowa ,
The defendants now use this tendency to support their position that the tort was never intended to apply to employees other than at-will employees who otherwise would have no remedy. The court of appeals rejected this argument as invalid deductive reasoning.
Additionally, we have not exclusively characterized the tort as an exception to the at-will employment doctrine. See, e.g. , Teachout v. Forest City Cmty. Sch. Dist. ,
While a right given to benefit one group would not necessarily exclude other groups to the right, the "life of the law," as observed by Chief Justice Oliver Wendell Holmes, "has not been logic, it has been experience." State v. Baldon ,
First, it is important to observe that the purpose of the common law claim of retaliatory discharge is distinct from the purpose of a claim of breach of contract. Contract claims seek to redress the private interests and individual promises of the parties. Retaliatory discharge claims, however, enforce "the communal conscience and common sense of our state in matters of public health, safety, morals, and general welfare." Jasper ,
In Keveney v. Missouri Military Academy , the Missouri Supreme Court found the tort of wrongful discharge applies to contract employees as well as at-will employees.
In Gonzalez v. Prestress Engineering Corp. , the Illinois Supreme Court affirmed the availability of a wrongful-discharge claim for CBA-covered employees.
In Retherford v. AT & T Communications of the Mountain States, Inc. , the Utah Supreme Court similarly extended retaliatory discharge claims to contract employees.
Second, when an employee is discharged in violation of public policy, the employer commits a wrong both in contract and in tort. "[W]here a duty recognized by the law of torts exists between the plaintiff and defendant distinct from a duty imposed by the contract ... a tort action [will] lie for conduct in breach of the contract." Preferred Mktg. Assocs. Co. v. Hawkeye Nat'l Life Ins. ,
In Byrd v. VOCA Corp. of Washington, D.C. , the District of Columbia Court of Appeals held contract employees may bring retaliatory discharge claims.
Importantly, retaliatory discharge is an intentional tort. Jasper ,
Finally, the existence of contract remedies does not preclude the extension of the tort to contract employees. In jurisdictions that have declined to permit contract employees to bring retaliatory discharge claims, courts have generally found that existing contract remedies are sufficient and obviate the need for the common law claim. See, e.g. , Silva v. Albuquerque Assembly & Distrib. Freeport Warehouse Corp. ,
Yet, these cases overlook the discrete rationales underlying contract and tort remedies. "If an employee is discharged for refusing to violate a public policy requirement, a breach of contract action satisfies private contractual interests but fails to vindicate the violated *619public interest or to provide a deterrent against future violations." Keveney ,
In Coleman v. Safeway Stores, Inc. , the Kansas Supreme Court overturned its previous cases that limited retaliatory discharge claims to at-will employees.
In Retherford , the Utah Supreme Court explained "the vindication of public policy worked by the tort cause of action cannot be accomplished by a contractual provision that prohibits discharges for any but just cause."
In Norris v. Hawaiian Airlines, Inc. , the Supreme Court of Hawaii similarly extended retaliatory discharge claims to contract employees due to the necessity of imposing tort remedies.
special damages, which compensate claimants for specific out of pocket financial expenses and losses, general damages for pain, suffering, and emotional distress, and punitive damages assessed for the purpose of punishing the defendant for aggravated or outrageous misconduct and to deter defendant and others from similar conduct in the future.
In Keveney , the Missouri Supreme Court found "it is inconsistent to allow an at-will employee to pursue an action for wrongful discharge while denying a contract employee the same right."
Retaliatory discharge "in violation of public policy is an intentional tort." Jasper ,
the complete injury, including economic loss such as wages and out-of-pocket expenses, as well as emotional harm. Emotional harm is a personal injury, and economic loss constitutes property damage. Thus, both personal injury and property damage are recoverable.
Under the defendants' view, wrongfully terminated CBA-covered employees already have an adequate remedy, as they may enforce the CBA's "just cause" provision. However, we agree with all of the above jurisdictions that it is incongruous for some employers to be subject to deterrent damages for wrongfully discharging an employee, while other employers are immunized from deterrent damages simply because they wrongfully terminated a contract, rather than an at-will, employee. The rationales for awarding punitive damages-punishment and deterrence-are no less compelling when an employer conditions a contract employee's employment on a violation of a clearly established public policy.
When adopting the retaliatory discharge tort in Springer , we indeed relied, in part, on an at-will employee's need for protection from improper interferences with employment.
In predicting that we would not allow contract employees to bring a retaliatory discharge tort, the court in Hagen relied on our holding in Harvey v. Care Initiatives, Inc. ,
Likewise, in New Horizons Electronics Marketing, Inc. v. Clarion Corp. of America , the Appellate Court of Illinois considered whether independent contractors may bring retaliatory discharge claims.
on the recognition that "employer and employee do not stand on equal footing," and a proper balance must be maintained among the employee's interest in operating a business efficiently and profitably, the employee's interest in earning a livelihood and society's interest in seeing its public policies carried out.
While the absence of a remedy to correct a wrong was an important factor in creating the tort for retaliatory discharge thirty years ago, it does not drive us so much in deciding whether to extend the tort to contract employees today. Instead, we are driven by other factors, such as ensuring that victims of intentional torts are fully compensated and that legislative schemes and public policy are not undermined. Accordingly, we hold contract employees may bring common law claims alleging wrongful termination in violation of public policy.
D. Effect of Ackerman's Statutory Remedy. Although we find that contract employees, generally, may bring retaliatory discharge claims, Ackerman's specific claim is not so easily resolved. Extending the tort to CBA-covered employees ensures the victim of an intentional tort is fully compensated and legislative schemes are not undermined. However, Ackerman is not a private contract employee, but rather a state employee who is aided by the additional safeguard of a statutory claim.
Iowa Code section 70A.28 provides a direct cause of action for state employees who suffer adverse employment actions in retaliation for whistleblowing. Iowa Code § 70A.28. The statute permits a wronged employee to seek "affirmative relief including reinstatement, with or without back pay, or any other equitable relief the court deems appropriate, including attorney fees and costs."
On appeal, the defendants recognized Ackerman's statutory remedies and, for the first time on further review, argued that we should find section 70A.28 to be exclusive, such that Ackerman is precluded from raising a common law claim. The defendants now urge us to look to Van Baale v. City of Des Moines , which found that chapter 400 is an exclusive remedy and therefore civil service employees may not bring separate common law retaliatory discharge claims.
Here, defendants failed to raise this issue at the district court and, instead, exclusively argued retaliatory discharge claims are categorically reserved for at-will employees. This is the issue we decide. The preclusive effect, if any, of section 70A.28 has not been properly litigated and raised on appeal and is therefore beyond our reach. Accordingly, we remand the case to the district court for further resolution of Ackerman's claim.
IV. Conclusion.
We hold that the common law tort of retaliatory discharge against public policy is generally available to contract employees. We affirm the decision of the court of appeals, reverse the decision of the district court, and remand for further proceedings.
DECISION OF COURT OF APPEALS AFFIRMED; DISTRICT COURT JUDGMENT VACATED AND CASE REMANDED.
All justices concur except Waterman and Mansfield, JJ., who dissent.
The court of appeals aptly described defendants' argument as "commit[ting] the fallacy of the inverse (otherwise known as denying the antecedent): the incorrect assumption that if P implies Q, then not-P implies not-Q." NLRB v. Noel Canning , 573 U.S. ----, ----,
Dissenting Opinion
I respectfully dissent. This is the wrong case to decide whether contract employees can bring a common law claim for wrongful termination in violation of public policy, a tort specifically created to provide a remedy for at-will employees. Susan Ackerman is not a private contract employee; she is a state employee with both statutory remedies and contract remedies under a collective bargaining agreement. The majority ignores the dispositive threshold question of whether a government employee in Ackerman's position with statutory remedies can also sue under the common law tort. The majority hides the ball by failing to acknowledge that the source of Ackerman's public policy claim is the very statute that provides her remedy. Because her common law claim fails as a matter of law, we should stop there and save for another day the question of whether the common law tort should remain limited to at-will employees.
The tort of wrongful discharge in violation of public policy exists only when two conditions are present: (1) a clearly articulated public policy has been violated and (2) a compelling need for a tort remedy has arisen because no other remedy is available. See Dorshkind v. Oak Park Place of Dubuque II, L.L.C. ,
I would affirm the district court's ruling dismissing Ackerman's common law claim. Ackerman may pursue contract remedies under the public employee union collective bargaining agreement (CBA). She may also proceed with her statutory right of action under Iowa Code section 70A.28. There is no need to create a third avenue of recovery, especially one that is at odds with the governing legislative enactment- section 70A.28. This is not a case involving a wrong without a remedy that cries out for a judicially created common law tort. Ackerman already has statutory as well as contractual remedies.
In Harvey , we emphasized that "we must refrain from extending protection to workers from unfair treatment after our legislature has weighed in on the issue and established the parameters of the governing public policy."
We allowed at-will employees to bring common law wrongful-discharge claims providing for punitive damages and emotional distress damages in order to vindicate important public interests codified in statutes (such as the right to file a workers' compensation claim) only when the statute itself did not create a private right of action to protect that interest. See Springer ,
The Restatement of Employment Law, which the majority overlooks, recognizes the body of law precluding common law wrongful-discharge public policy torts when, as here, the state's civil service statute provides remedies. Comment e to section 5.01, "Wrongful Discharge in Violation of Public Policy," states,
Courts have also found that many state civil-service statutes create a comprehensive regulatory scheme with adequate remedies against wrongful government-employer decisions, and thus have precluded common-law public-policy claims based on violations of these statutes. Civil-service employees typically cannot recover in tort for a wrongful discharge in violation of public policy. Courts are reluctant to recognize a parallel common-law action that might undermine the civil-service system's administrative scheme and its balance between employee and employer interests.
Restatement of Emp't Law § 5.01 cmt. e , at 191 (Am. Law Inst. 2015). Illustration 3 provides,
Employee E is employed by state S and covered by the state's civil-service system. That system provides administrative procedures protecting employees against discharge without cause and authorizes reinstatement with back pay for violations. E is summoned for jury duty, and notifies his supervisor that E will miss work for that reason. E is discharged for being absent from work while on jury duty. E has no common-law tort claim for wrongful discharge in violation of public policy under this Section because the state's comprehensive civil-service system provides E with an adequate remedy.
The majority notes the State did not move for dismissal on the ground that section 70A.28 provides the exclusive remedy, and accordingly, the majority does not reach that exclusivity issue. The majority instead remands the case to the district court.
Yet in Walsh v. Wahlert , we held that a state employee cannot bring a common law cause of action for wrongful termination in violation of public policy because the civil service system "provides a comprehensive framework for the resolution of such claims."
Apart from section 70A.28, Ackerman also has a remedy under the CBA and Iowa Code section 20.7(3), both of which provide she may only be terminated for just or proper cause. The State specifically raised this point below, and the district court also relied on it as an additional ground for dismissal.
Count VIII provides Plaintiff with an additional avenue for remedy through wrongful discharge. Plaintiff's employment is subject to a collective bargaining agreement, negotiated for her and others in her position. To the extent that the agreement provides for a remedy relating to wrongful discharge, Plaintiff is not allowed to apply the narrow exception Iowa courts have reserved for at-will employment to her current situation.
I agree with the district court and would decline to extend the common law tort to contract employees. This common law tort *625has always been recognized as a narrow "public-policy exception to the general rule of at-will employment." Dorshkind ,
As the majority notes, the United States Court of Appeals for the Eighth Circuit reviewed our caselaw to hold only at-will employees may recover under this theory. Hagen v. Siouxland Obstetrics & Gynecology, PC ,
Contract employees have contract remedies. I would follow the foregoing precedent holding the tort of wrongful discharge in violation of public policy is only available to at-will employees. And I would not purport to hold otherwise in a case in which the plaintiff, a government contract employee who also has statutory remedies, lacks a viable common law claim.
For these reasons, I respectfully dissent.
Mansfield, J., joins this dissent.
In Godfrey v. State , a majority of our court concluded the absence of punitive damages under the Iowa Civil Rights Act (ICRA) did not make its statutory remedies inadequate.
Reference
- Full Case Name
- Susan ACKERMAN, Appellant, v. STATE of Iowa, Iowa Workforce Development, Teresa Wahlert, Teresa Hillary, and Devon Lewis, Appellees.
- Cited By
- 12 cases
- Status
- Published