Court Opinion

ID: 4250119
Source: CourtListenerOpinion
Date Created: 2018-02-28 21:23:20.408837+00
Date Added: 2024-06-11T09:26:18.725641
License: Public Domain

IN THE SUPREME COURT OF IOWA
                            No. 88 / 05-2127

                         Filed October 12, 2007

TYSON FOODS, INC.,

      Appellant,

vs.

MIGDALIA HEDLUND,

      Appellee.

      On review from the Iowa Court of Appeals.

      Appeal from the Iowa District Court for Polk County, Robert J.

Blink, Judge.

      Employer seeks further review of a case involving application of

judicial estoppel.   DECISION OF COURT OF APPEALS VACATED;

DISTRICT COURT JUDGMENT REVERSED; CASE REMANDED.

      Coreen K. Sweeney and Scott A. Sundstrom of Nyemaster, Goode,

West, Hansell & O’Brien, P.C., Des Moines, for appellant.

      Randall P. Schueller of Hopkins & Huebner, P.C., Des Moines, for

appellee.
                                       2

CADY, Justice.

      In this appeal we must decide whether an employer may contest

liability for an injury to its employee after admitting liability for the injury

at a previous alternate medical care hearing. The workers’ compensation

commissioner determined the employer was unable to deny liability

based on the doctrine of issue preclusion. The district court affirmed.

The court of appeals also affirmed, but held the liability issue was not res

judicata. Instead, the court of appeals applied the doctrine of judicial

estoppel and held the employer was estopped from contesting liability.

On further review, we vacate the decision of the court of appeals, reverse

the judgment of the district court, and remand to the commissioner for

further proceedings.

      I. Background Facts and Proceedings.

      Migdalia Hedlund (Hedlund) was employed by Tyson Foods, Inc.

(Tyson Foods).      On January 10, 2005, Hedlund filed a workers’

compensation claim asserting she sustained a work-related injury to her

bilateral hands, wrists, elbows, arms, right shoulder, and neck on

February 1, 2004.

      Hedlund’s treating physician was Dr. Timothy Schurman.                On

November 8, 2004, Dr. Schurman diagnosed Hedlund with “underlying

inflammatory problems, possibly rheumatoid arthritis.”          Dr. Schurman

also recommended Hedlund be seen by a rheumatologist.

      On January 4, 2005, Tyson Foods submitted a series of written

questions to Dr. Schurman. Tyson Foods asked:

             1.   “Are you able to state within a reasonable degree
      of medical certainty that the diagnosis of rheumatoid
      arthritis was caused by her work activities at Tyson Foods,
      Inc.?”
                                         3
             2. “Your 11/08/04 note indicates ‘possible RA
       aggravated by the work place’.        Did the aggravation
       physically change the underlying condition?”
            3. “Will further treatment be indicated for any work
       caused injury?”

Dr. Schurman responded in the negative to all three questions.

       On February 11, 2005, Dr. Schurman diagnosed Hedlund with

“underlying inflammatory arthritis, which has been materially aggravated

by the work place.”          In a February 18, 2005 letter, Dr. Schurman

indicated Hedlund’s condition was aggravated by her work at Tyson

Foods.

       Tyson Foods considered Dr. Schurman’s opinions to be conflicting

and requested an independent medical examination of Hedlund as

allowed by Iowa Code section 85.39 (2005).1               An appointment with

Dr. Delwin Quenzer was scheduled for this purpose. Hedlund, however,

believed the appointment with Dr. Quenzer was an attempt to change her

treating physician.

       As   a     result,   Hedlund   filed   a    petition   with   the   workers’

compensation commissioner for alternate medical care on April 14, 2005

(April petition). At the hearing on the April petition, Tyson Foods clarified
that the appointment with Dr. Quenzer was only for the purpose of an

Iowa Code section 85.39 independent medical evaluation. Consequently,

a deputy commissioner dismissed the petition.             In a written dismissal

order, the deputy found, “[a]s a result of claimant setting forth that the

basis for the application for alternate medical care no longer exists, there

is, therefore, no issue to be resolved.”          The deputy commissioner also

       1Section  85.39 provides: “After an injury, the employee, if requested by the
employer, shall submit for examination at some reasonable time and place and as often
as reasonably requested . . . .” Iowa Code § 85.39 (2005).
                                        4

indicated in the order that, “[d]uring the course of the [April alternate

medical care] hearing, [Tyson Foods] was asked whether liability was

accepted on this claim and the attorney for [Tyson Foods] stated it was.”

         Tyson Foods was subsequently not able to reschedule the

independent medical examination with Dr. Quenzer and was unable to

retain a rheumatologist willing to see Hedlund.           Instead, Tyson Foods

scheduled the independent medical examination with Dr. Donna Bahls.

         On June 6, 2005, Hedlund filed a second petition for alternate

medical care (June petition). Hedlund claimed Tyson Foods refused to

provide her with the care of a rheumatologist.            Tyson Foods filed an

answer to the petition, but did not indicate it disputed liability of the

claim.

         On June 13, 2005, Tyson Foods received the results of Dr. Bahls’

independent medical examination of Hedlund. Based on those results,

Tyson Foods filed an amended answer to the second petition for alternate

medical care, indicating it was disputing liability.

         On June 21, 2005, a deputy workers’ compensation commissioner

held a hearing on the second petition for alternate care. Tyson Foods

sought to amend its answer to specifically deny liability based on new

medical information obtained from Dr. Bahls. The deputy commissioner

determined      Tyson   Foods    was    precluded    under      the   doctrine   of

res judicata from contesting liability for the injury after it admitted

liability in the first alternate medical care proceeding.         Pursuant to a

delegation of authority by the workers’ compensation commissioner, the

deputy      commissioner’s   decision    constituted    final   agency    action.2

         2See
            Iowa Code § 86.3 (allowing a deputy commissioner the power to issue a
final agency decision pursuant to a written delegation of authority by the workers’
compensation commissioner).
                                       5

Consequently, Tyson Foods filed a petition for judicial review with the

district court. On December 6, 2005, the district court likewise found

the issue of liability to be res judicata.

      Tyson Foods appealed, and we transferred the case to the court of

appeals. The court of appeals held the doctrine of issue preclusion did

not apply because the issue was not actually raised and litigated in the

first alternate medical care proceeding.      However, it concluded Tyson

Foods was judicially estopped from denying liability for Hedlund’s injury

after it had conceded the issue at the April alternate medical care

hearing.

      II. Standard of Review.

      “We apply the standards of Iowa Code section 17A.19 in our review

of workers’ compensation decisions.” R.R. Donnelly & Sons v. Barnett,

670 N.W.2d 190, 195 (Iowa 2003). “On our review of the district court’s

decision, we apply the standards of chapter 17A to determine if our

conclusions are the same as those of the district court. If so, we affirm;

otherwise, we reverse or otherwise modify.”       Winnebago Indus., Inc. v.

Haverly, 727 N.W.2d 567, 571 (Iowa 2006) (citing Hill v. Fleetguard, 705
N.W.2d 665, 669 (Iowa 2005)).

      In this case, the district court relied on the doctrine of res judicata,

as did the deputy commissioner, to support its conclusion that Tyson

Foods was precluded from contesting liability.        The court of appeals

affirmed, but relied on the doctrine of judicial estoppel. As an “equitable

doctrine invoked by a court at its discretion,”3 the appropriate standard

        3New Hampshire v. Maine, 532 U.S. 742, 750, 121 S. Ct. 1808, 1815, 149
L. Ed. 2d 968, 977 (2001).
                                           6

of appellate review would normally be for an abuse of discretion.4

However, on further review from a decision of the court of appeals, we

nevertheless review the decision of the district court.                Therefore, we

review, as did the court of appeals, for corrections of errors at law. IBP,

Inc. v. Harpole, 621 N.W.2d 410, 414 (Iowa 2001).

       III. Issue Preclusion.

       We first consider whether the district court correctly applied the

doctrine of res judicata or issue preclusion. One important element of

issue preclusion is that the issue to be precluded must have been “raised

and litigated” in the previous proceeding. Haverly, 727 N.W.2d at 572.

Because the liability issue was admitted in the first proceeding, the issue

was not actually raised and litigated.           Id.   Consequently, the district

court erred by holding that Tyson Foods was precluded from contesting

liability based on issue preclusion.

       IV. Judicial Estoppel.

       A. General Principles. We next consider whether the decision of

the district court can be upheld under the doctrine of judicial estoppel.

Although this theory was not raised or argued before the district court,

we have previously stated:         “[B]ecause judicial estoppel is intended to

protect the integrity of the fact-finding process by administrative

agencies and courts, the issue may properly be raised by courts, even at

the appellate stage, on their own motion.” Id. at 573.

       4“The   mainstream of American jurisprudence,” including a majority of the
federal circuit courts of appeal, agrees. See Middleton v. Caterpillar Indus., Inc., ___
So. 2d ___ (Ala. 2007) (Parker, J., concurring) (“A survey of opinions from other
jurisdictions indicates that Alabama would join the mainstream of American
jurisprudence in adopting an exceeding-discretion standard in matters involving
judicial estoppel.”); Stallings v. Hussmann Corp., 447 F.3d 1041, 1046 (8th Cir. 2006)
(“A majority of our sister circuits that have addressed the issue apply the abuse of
discretion standard.”).
                                            7

       We first engaged in a comprehensive discussion of the doctrine of

judicial estoppel in Vennerberg Farms, Inc. v. IGF Insurance Co., 405
N.W.2d 810 (Iowa 1987). Id. at 814 (observing that “[t]he rule has been

sparingly applied in other jurisdictions and only alluded to in our own”).

There, we observed that judicial estoppel is a “commonsense doctrine”

that “prohibits a party who has successfully and unequivocally asserted

a position in one proceeding from asserting an inconsistent position in a

subsequent proceeding.”          Id.   Moreover, it is “designed to protect the

integrity of the judicial process.”             Id.   It applies to administrative

proceedings as well as court proceedings. Haverly, 727 N.W.2d at 573–

74. The doctrine

       addresses the incongruity of allowing a party to assert a
       position in one tribunal and the opposite in another, thereby
       creating the perception that at least one court has been
       misled.

Vennerberg Farms, 405 N.W.2d at 814.                   Yet, as the United States

Supreme Court has observed, “ ‘[t]he circumstances under which judicial

estoppel may appropriately be invoked are probably not reducible to any

general formulation of principle.’ ” New Hampshire, 532 U.S. at 750, 121

S. Ct. at 1815, 149 L. Ed. 2d at 978 (quoting Allen v. Zurich Ins. Co., 667
F.2d 1162, 1166 (4th Cir. 1982)). We have likewise been flexible in our

past application of the doctrine and view its flexible parameters as a

strength in its ability to achieve its goal.5

       5For example, we have only irregularly required an intent to mislead the court by
adoption of the inconsistent positions. Compare Roach v. Crouch, 524 N.W.2d 400, 403
(Iowa 1994) (stating “application of the doctrine requires proof of an intentional attempt
to mislead the court with the inconsistency”); Graber v. Iowa Dist. Ct., 410 N.W.2d 224,
228 (Iowa 1987) (stating “an intentional attempt to mislead the court with the
inconsistency must be shown”); Vennerberg Farms, 405 N.W.2d at 814 (basing our
holding in part on a conclusion that “there is no evidence that Vennerberg misled the
court” in the first proceeding), with Haverly, 727 N.W.2d at 573–75 (estopping a party
from advancing an inconsistent position, but not requiring intent to mislead the court);
                                            8

       Nonetheless, we have often affirmed

       [a] fundamental feature of the doctrine is the successful
       assertion of the inconsistent position in a prior action.
       Absent judicial acceptance of the inconsistent position,
       application of the rule is unwarranted because no risk of
       inconsistent, misleading results exists.

Vennerberg Farms, 405 N.W.2d at 814; accord Haverly, 727 N.W.2d at

573; Wilson, 666 N.W.2d at 166; Jacobs, 607 N.W.2d at 687; Roach, 524
N.W.2d at 403; Graber, 410 N.W.2d at 228.                    The judicial-acceptance

component of the doctrine is the focal point of the resolution of this case.

       B. Judicial Acceptance.             The court of appeals held that the

admission of liability by Tyson Foods was judicially accepted by the

commissioner at the first alternate medical care hearing. Tyson Foods

asserts on further review that its initial acceptance of liability was never

accepted by the commissioner in rendering the decision.

State v. Duncan, 710 N.W.2d 34, 43–45 (Iowa 2006) (discussing judicial estoppel, but
not mentioning intent to mislead); Wilson v. Liberty Mut. Group, 666 N.W.2d 163, 166–
67 (Iowa 2003) (estopping a party’s inconsistent position, but not imposing an intent-to-
mislead requirement); State v. Jacobs, 607 N.W.2d 679, 686–87 (Iowa 2000) (discussing
judicial estoppel, but not addressing intent to mislead); Ezzone v. Hansen, 474 N.W.2d
548, 549–51 (Iowa 1991) (discussing the “elements” of judicial estoppel, but not
mentioning intent to mislead). Our past inconsistency in requiring an intent to mislead
reflects national equivocation on the question of whether intent should be relevant to
application of judicial estoppel. See Brian A. Dodd, Civil Procedure Intent and the
Application of Judicial Estoppel: Equitable Shield or Judicial Heartbreak?, 22 Am. J.
Trial Advoc. 481, 481 (1998) (observing “[t]he degree to which a court will consider the
intent of a litigant in the application of judicial estoppel is an issue causing great
division among the jurisdictions, with no clear or unequivocal guidelines”). We believe
the better approach is to refrain from “establish[ing] inflexible prerequisites or an
exhaustive formula for determining the applicability of judicial estoppel.”
New Hampshire, 532 U.S. at 751, 121 S. Ct. at 1815, 149 L. Ed. 2d at 978. As such, a
party’s intent to mislead is not a mandatory requirement, but may be considered
insofar as it is relevant to pursuit of the stated goal of judicial estoppel: protection of
the integrity of the judicial process. Whitacre P’ship v. Biosignia, Inc., 591 S.E.2d 870,
891 (N.C. 2004) (refusing to impose a scienter requirement but allowing “it would weigh
heavily in favor of invoking the doctrine” of judicial estoppel).
                                    9

      We have never explicitly defined what constitutes “judicial

acceptance.”    However, examination of our previous judicial estoppel

jurisprudence demonstrates we have found judicial acceptance only

when the previous, inconsistent assertion was material to the holding in

the first proceeding.   For example, we applied the doctrine of judicial

estoppel in Wilson v. Liberty Mutual Group, 666 N.W.2d 163 (Iowa 2000).

In Wilson,

      a workers’ compensation claimant settled his case with his
      employer under the provisions of Iowa Code section 85.35.
      As required by that statute, Wilson admitted there was a
      bona fide dispute with his employer regarding the cause of
      his injury. His employer’s insurance carrier paid benefits
      under the settlement agreement. Wilson then filed a lawsuit
      against the insurance carrier for alleged bad-faith failure to
      settle the claim.

Haverly, 727 N.W.2d at 574 (citing Wilson, 666 N.W.2d at 165). We held

Wilson was estopped from claiming a bad-faith failure to settle because

the court relied on his prior acknowledgement of a bona fide dispute over

liability in approving the settlement agreement. Wilson, 666 N.W.2d at

166–67.      See generally Iowa Code § 85.35 (requiring parties to a

contested case to submit a settlement to the workers’ compensation

commissioner for approval). We observed that

      [p]lainly Wilson’s position in the bad faith action is
      inconsistent with the position he asserted in the workers’
      compensation litigation. To prevail on his bad faith claim,
      Wilson would necessarily have to prove that Liberty Mutual
      had no reasonable basis to deny his claim. Yet in the section
      85.35 proceedings before the workers’ compensation
      commissioner, Wilson successfully asserted there was a
      bona fide dispute as to whether his injuries were work-
      related so as to entitle him to additional benefits. These
      positions are clearly inconsistent.

Wilson, 666 N.W.2d at 167.
                                       10

       In contrast, in Vennerberg Farms we held an issue was not

judicially accepted when the position asserted was not material to the

disposition of the prior litigation. 405 N.W.2d at 814.   In that case,

Vennerberg Farms, Inc. was owed money by Stennett Elevator, Inc., a

licensed grain dealer, under various deferred-payment contracts. Id. at

812.     However, the state commerce commission revoked Stennett

Elevator’s grain dealer’s license, resulting in the appointment of a

receiver. Id. In such a circumstance, Iowa Code section 542.12 required

Vennerberg Farms to file any claims against the grain dealer (Stennett)

and its surety within 120 days of the revocation of the license. Id. at

811–12.

       Vennerberg Farms subsequently filed a claim, which the surety

denied as untimely. Id. at 812. Vennerberg Farms then filed a petition

in district court, which required the court to decide whether Vennerberg

Farms filed its claim within 120 days of the revocation of Stennett’s grain

dealer’s license, as required by statute. Id. at 814.

       In a previous proceeding, Vennerberg Farms had asserted

Stennett’s license was revoked in November of 1983.       Id.   The surety

argued Vennerberg Farms was bound to its assertion in the previous

lawsuit under the doctrine of judicial estoppel. Id. However, we refused

to apply the doctrine to bind Vennerberg Farms on the grounds that

“[t]he precise date of Stennett’s license revocation was immaterial in the

prior litigation and no particular date can reasonably be claimed to have

been accepted unequivocally by the court.” Id.

       Consequently, it is apparent judicial estoppel applies only when

the position asserted by a party was material to the holding in the prior

litigation.   This approach most closely tracks the rationale underlying

judicial estoppel, as reflected in our prior pronouncement that, “[a]bsent
                                    11

judicial acceptance of the inconsistent position, application of the rule is

unwarranted because no risk of inconsistent, misleading results exists.”

Id; accord Haverly, 727 N.W.2d at 573; Wilson, 666 N.W.2d at 166;

Jacobs, 607 N.W.2d at 687; Roach, 524 N.W.2d at 403; Graber, 410
N.W.2d at 228.     When the inconsistent facts are not material to the

disposition of the successive proceedings, these facts do not pose a risk

of producing inconsistent or misleading results.     Consequently, where

there is no risk of inconsistent or misleading results, the rationale

underlying the judicial estoppel doctrine is not advanced and there is no

reason to apply the doctrine.

        Vennerberg Farms—our seminal case addressing the doctrine of

judicial estoppel—is an apt example. The date of revocation of Stennett’s

grain dealer’s license was not material to the outcome of the first

proceeding.    That date was, however, dispositive in Vennerberg Farms,
405 N.W.2d at 813, the second proceeding.            Yet, even if the two

proceedings yielded misleading or inconsistent results, those results did

not occur as a result of Vennerberg Farms advancing inconsistent

positions regarding the date of revocation in the two proceedings.       As

Vennerberg Farms implies, the application of the doctrine of judicial

estoppel under such circumstances simply does not advance the policy

goal of avoiding inconsistent, misleading results.

        With these concepts in mind, we turn to the circumstances of this

case.    There is no doubt Tyson Foods asserted a position in the first

proceeding for alternate medical care inconsistent with its position in the

second proceeding.      Yet, as our cases have developed, the fighting

question is whether the inconsistent position asserted in the first

proceeding was accepted by the commissioner in the disposition of the

matter.
                                      12

      When an injured worker files a petition for alternate medical care,

the admission of liability can be, and usually is, an essential issue to the

resolution of the matter. Liability is normally an important component of

the course of an alternate medical care proceeding because “the

commissioner cannot order that the alternate care sought by the

employee be furnished by the employer prior to a determination of

compensability of the injury.” R.R. Donnelly, 670 N.W.2d at 197. Thus,

if the employer accepts liability, the commissioner is permitted to

determine the “reasonableness and necessity of medical care sought by

an employee as an alternative to the care furnished by the employer.” Id.

Conversely, if the employer denies liability, the commissioner must deny

the petition.    Id.   Under this approach, the issue of liability, in both

situations, is usually necessary to the disposition of the petition.

Accordingly when an employer takes a position on liability during the

proceedings on alternate medical care, the commissioner normally relies

on that position in disposing of the application. See Haverly, 727 N.W.2d

at 575. This case, however, is an exception.

      In this case, Tyson Foods clearly took a position on liability at the

first hearing.    However, the commissioner did not act in any way to

dispose of the application based on that position.            Instead, the

commissioner dismissed the petition solely because the grounds for

alternate medical care asserted by Hedlund in the petition were

determined to be mistaken, and the mistake was unrelated to the issue

of liability or the acknowledgement of liability by Tyson Foods. Once the

mistake was clarified at the hearing, the employee no longer needed the

commissioner to determine the reasonableness and necessity of the

medical care. The alternate medical care issue was rendered moot, and

the proceeding was, as a result, a nonevent. The admission of liability by
                                    13

Tyson Foods played no role in the dismissal of the petition by the deputy

commissioner. Consequently, judicial estoppel does not apply.

      Hedlund argues that the failure to apply judicial estoppel to the

circumstances of this case will permit employers to accept liability during

the course of a workers’ compensation proceeding for the purpose of

controlling medical care, and then later allow employers to deny the

claim at the hearing in an effort to avoid responsibility for the injury.

She argues this situation will enable employers to undermine the

purpose of the alternative medical care process.             Tyson Foods

acknowledges tension can exist between employers and employees over

the control of medical care, but points to its own problems when forced

to take a position on liability before all relevant medical information may

be known.

      We recognize the problems that can arise between the parties over

medical care. Yet, we think our existing legal principles, of which judicial

estoppel is only one, serve to allay the competing concerns. Even though

judicial estoppel applies only when needed to protect the integrity of the

judicial process, a “broader analytical framework of estoppel and

preclusion doctrines” exists to allow courts to equitably address the

concerns of the parties.   See Whitacre P’Ship, 591 S.E.2d at 879.       In

other words, there are additional considerations beyond the judicial

acceptance component of judicial estoppel to guide in a fair resolution of

the concerns over medical care hypothesized by the parties.           Such

concerns are not presented under this record.

      V. Conclusion.

      The workers’ compensation commissioner and district court

erroneously applied the doctrine of issue preclusion.      The doctrine of

judicial estoppel does not apply. We vacate the decision of the court of
                                  14

appeals, reverse the judgment of the district court, and remand the case

to the workers’ compensation commissioner for further proceedings.

     DECISION OF COURT OF APPEALS VACATED; DISTRICT

COURT JUDGMENT REVERSED; CASE REMANDED.