Court Opinion

ID: 3062377
Source: CourtListenerOpinion
Date Created: 2015-10-14 15:05:31.936336+00
Date Added: 2024-06-11T11:49:34.019896
License: Public Domain

IN THE COURT OF APPEALS OF IOWA

                                  No. 14-1544
                            Filed October 14, 2015

JACOB HACKMAN,
    Plaintiff-Appellee,

vs.

NEW HAMPTON MUNICIPAL LIGHT PLANT,
     Defendant-Appellant.
________________________________________________________________

      Appeal from the Iowa District Court for Chickasaw County, Margaret

Lingreen, Judge.

      New Hampton Municipal Light Plant appeals from judgment entered on a

jury verdict of wrongful discharge of its former employee, Jacob Hackman, and

from the district court’s order awarding Hackman attorney fees. AFFIRMED.

      Joel J. Yunek of Yunek Law Firm, P.L.C., Mason City, for appellant.

      David H. Skilton of Cronin, Skilton & Skilton, P.L.L.C., Charles City, for

appellee.

      Heard by Vaitheswaran, P.J., and Potterfield and McDonald, JJ.
                                       2

POTTERFIELD, Judge.

       New Hampton Municipal Light Plant (“Plant”) appeals from judgment

entered on a jury verdict of wrongful discharge of its former employee, Jacob

Hackman, and from the district court’s order awarding Hackman attorney fees.

       I. Factual and Procedural Background

       Hackman was hired by the Plant in June 2008 as an operator.             He

understood he was to be trained as a lineman as well to enable him to perform

additional tasks in the course of his employment. Hackman and his coworker,

David Hauser, reported to Gregory Heying, another operator. Brian Geschke

was the Plant’s manager.

       Heying and Geschke operated a scheme in which they sold the Plant’s

scrap metal for cash. The scrap metal belonged to the Plant—which was owned

by the city of New Hampton—but Geschke would retain the proceeds and use

the money for purposes unrelated to the operation of the Plant, buying flowers,

cards, and gifts and throwing a Christmas party. On June 13, 2011, Hackman

observed Heying selling scrap metal for cash and took a photograph of the

transaction in progress. Hackman confronted Heying about the transaction, and

Heying stated he was going to give the money to Geschke.

       Later in the fall of 2011, Geschke gave each Plant employee $1000 in

cash and told them to be discreet about the money. Hackman accepted the

money. He later testified he felt “forced” to take the money; he believed his job

was on the line if he appeared to cause trouble for Geschke. Hackman was

unsettled by the distribution of cash, but he did not act to report it until the

following spring.
                                         3

       In April 2012, Hackman reported to a member of the Plant’s board of

trustees, Larry Throndson, other concerns he had with the operations of the

Plant, but he did not report the disbursement of cash from the scrap metal sale.

Following his conversation with Throndson, Hackman informed Hauser that

Throndson could be trusted to handle their concerns about the cash distribution.

Without Hackman’s knowledge, Hauser approached Throndson on May 7, 2012.

Hauser showed Throndson the cash he had received and explained where it

came from. Throndson said he would investigate.

       Hackman and Hauser had agreed to approach Throndson together, which

they did on May 8, 2012.       The two intended to disclose other concerns to

Throndson on that day, purportedly to test Throndson’s trustworthiness.

Throndson mentioned the cash disbursements, which alerted Hackman to the

fact that Hauser had already initiated contact about the scrap metal proceeds.

The next day, May 9, 2012, Hackman and Hauser again approached Throndson.

They both relinquished their shares of the cash to Throndson and provided

Throndson with additional details about the scrap metal scheme.           Both men

asked Throndson to protect their identities.1 Hackman went on to cooperate with

the county deputy sheriff who led the ensuing investigation about the recycling-

for-cash adventure. He provided the deputy with the photograph he took of the

transaction that occurred on June 13, 2011.

       After the scrap metal scheme was exposed, Geschke left the Plant. An

interim manager—Leon Rodas—was appointed. Rodas testified the Plant was

1
 Though Throndson agreed to maintain Hackman’s anonymity, Geschke and Heying
both testified they believed Hackman to have been the one to blow the whistle on them
even before he was identified.
                                             4

staffed at “a bare minimum” when he began work as interim manager. An email

thread between New Hampton’s city clerk and the chairman of the Plant’s board

of trustees exchanged on November 14, 2012, indicates Rodas made a

“recommendation to remove the employee reporting issues.” The email is not

clear as to whether the recommended removal was to be from the board’s

agenda or from a workforce. In the email, the chairman stated the Plant’s new

manager should deal with employees’ reporting of issues as a matter of the

Plant’s policy.

       On December 3, 2012, Brian Quirk assumed the Plant manager role and

relieved interim manager Rodas.             On January 8, 2013, Quirk suspended

Hackman without pay for three days.                 Hackman was surprised by the

suspension—it was not preceded by any formal warnings or other discipline, and

no concerns with Hackman’s work performance had been raised with Hackman.2

Quirk requested Heying’s presence to witness the suspension.

       Soon after Hackman returned to work—on January 22—Quirk laid him off.

Quirk requested Heying and another employee whom Hackman had reported for

2
  Quirk claimed the suspension was justified based on three separate incidents. First,
Hackman left unapproved union literature on a desk in a common area. Hackman
removed the literature when prompted, but Quirk asserted Hackman was defensive and
used profanity when Quirk confronted him. Second, Hackman had asked Quirk to
address concerns with other employees’ personal use of the Plant’s truck. Quirk offered
to make a policy change as to the truck’s usage. Hackman believed Quirk’s suggestion
was an insufficient remedy to the problem and publically stated before the Plant’s board
that Quirk was not rectifying the issue. Third, Quirk had directed Hackman to locate an
underground service wire. Hackman refused, indicating that task was the responsibility
of the linemen. (Though Hackman had been hired with the understanding he would be
trained as a lineman, no such training ever occurred.) In his written suspension notice,
Quirk cited Hackman for “failure to demonstrate courteous and respectful behavior” and
other violations of the Plant’s personnel policies. Heying testified at trial that he was not
aware of any other employee being disciplined for leaving literature on their desk as
Hackman had. He also confirmed it was not Hackman’s duty as an operator to locate
active underground wiring.
                                              5

misuse of Plant property, Travis Schumacher, be present to witness Hackman’s

termination. Although Quirk asserted the lay-off was necessitated by a lack of

work, a new lineman had been recently hired.                     Soon after Hackman’s

employment was terminated, two more employees were hired as linemen and

were also being trained as operators.

       Hackman filed his petition at law on March 6, 2013. The petition included

a tort action for retaliatory wrongful discharge and a claim of a violation of Iowa’s

whistleblower statute, Iowa Code section 70A.29 (2013).3                At trial, the Plant

moved for directed verdict at the close of Hackman’s case and again at the close

of its defense, claiming Hackman did not fall within Iowa’s whistleblower

protection laws and there was insufficient evidence to present the wrongful-

discharge claim to the jury. The district court denied the motions. The wrongful-

discharge claim was submitted to the jury, and the district court reserved ruling

on the statutory whistleblower claim until the jury returned its verdict. The jury

found the Plant liable for wrongful discharge and found Hackman suffered

$79,849 in damages in lost past earnings.

       The Plant moved for judgment notwithstanding the verdict or in the

alternative for a new trial.      The district court denied the motion and entered

judgment on the jury verdict for wrongful discharge.                The court then ruled

Hackman had proved his statutory claim under the whistleblower statute.

Because Hackman had recovered his lost-earnings damages through the jury

verdict, the court awarded Hackman only attorney fees as damages on the

3
 Iowa Code section 70A.29(1) provides in part, “A person shall not discharge an
employee . . . as a reprisal for a disclosure of any information by that employee . . . if the
employee reasonably believes the information evidences a violation of law or rule . . . .”
                                           6

statutory claim. The Plant now appeals the district court’s entry of judgment on

the jury verdict and its order as to the statutory claim.

        II. Standard and Scope of Review

        “[T]he existence of a public policy, as well as the issue whether that policy

is undermined by a discharge from employment, presents questions of law for

the court to resolve”; we review for errors at law. See Fitzgerald v. Salsbury

Chem., Inc., 613 N.W.2d 275, 282 (Iowa 2000).

        We review the Plant’s question of the interpretation of Iowa Code section

70A.29 for correction of errors at law. See L.R. Noll Inc. v. Eviglo, 816 N.W.2d
391, 393 (Iowa 2012); see also Zwanziger v. O’Brien, No. 11-1548, 2012 WL
4513836, at *1 (Iowa Ct. App. Oct. 3, 2012).

        We review the district court’s denials of the Plant’s motions for directed

verdict for errors at law. See Easton v. Howard, 751 N.W.2d 1, 5 (Iowa 2008).

        In doing so we view the evidence in the light most favorable to the
        nonmoving party and take into consideration all reasonable
        inferences that could be fairly made by the jury. If substantial
        evidence in the record supports each element of a claim, the
        motion for directed verdict must be overruled. When reasonable
        minds would accept the evidence as adequate to reach the same
        findings, evidence is substantial. On appeal our role is to
        determine whether the trial court correctly determined there was
        sufficient evidence to submit the issue to the jury.

Id. (citations omitted).

        III. Whistleblower Protections

        The Plant’s first two claims on appeal assert Hackman should not be

protected either as a whistleblower pursuant to Iowa Code section 70A.29 or

under the public-policy exception to the Plant’s right to discharge an employee at

will.
                                            7

                 A. Public Policy

           Because Iowa is an at-will employment state, “the employment

relationship is terminable by either party at any time, for any reason, or no reason

at all.”     Fitzgerald, 613 N.W.2d at 280 (citation and internal quotation marks

omitted). However, Iowa has carved out a “public-policy exception to the general

rule of at-will employment for wrongful-discharge claims.” Dorshkind v. Oak Park

Place of Dubuque II, L.L.C., 835 N.W.2d 293, 300 (Iowa 2013). An employee

seeking the protection of the public-policy exception must establish “(1) the

existence of a clearly defined and well-recognized public policy that protects the

employee’s activity; (2) this public policy would be undermined by the employee’s

discharge from employment; [and] (3) the employee engaged in the protected

activity, and this conduct was the reason the employer discharged the

employee . . . .” Berry v. Liberty Holdings, Inc., 803 N.W.2d 106, 109–10 (Iowa

2011).4 “The first two elements constitute questions of law to be determined by

the court.” Dorshkind, 835 N.W.2d at 300.

           The Plant argues on appeal Hackman should not be protected under the

public-policy exception or Iowa Code section 70A.29 because he purportedly

blew the whistle on his own misconduct, placing him outside the scope of the

intended protected class. The Plant’s claim is a challenge to the district court’s

determination as to the first two elements of the public-policy exception.

4
  In delineating the elements of this tort claim, Berry also discusses whether “the
employer had no overriding business justification for the discharge” as an element to be
established by the employee. Berry, 803 N.W.2d at 110. However, our supreme court
has recently clarified employees do not bear the burden to prove “the lack of a legitimate
business justification.” Rivera v. Woodward Res. Ctr., 865 N.W.2d 887, 898 (Iowa
2015).
                                        8

      First, there is a clearly defined and well-recognized public policy that

protects Hackman’s disclosures of wrongdoing to the Plant’s board and to the

deputy sheriff: the policy underlying Iowa Code section 70A.29. See Fitzgerald,
613 N.W.2d at 283 (“In determining whether a clear, well-recognized public policy

exists . . . , we have primarily looked to our statutes . . . .   Some statutes

articulate public policy by specifically prohibiting employers from discharging

employees for engaging in certain conduct or other circumstances.”).

      The Plant cites to federal case law as persuasive authority for the

proposition that the whistleblower protections found in section 70A.29 should not

apply to Hackman and therefore the statute should not serve as a public policy

protecting Hackman’s activities. See Watson v. Dep’t of Justice, 64 F.3d 1524,

1527 n.3 (8th Cir. 1995); Marano v. Dep’t of Justice, 2 F.3d 1137, 1142 n.5 (Fed.

Cir. 1993) (citing 135 Cong. Rec. 5033 (1989)). The Plant fails to recognize

these cases are distinguishable from the case before us.

      In Watson, the Eight Circuit Court of Appeals acknowledged disclosures of

one’s own misconduct are not protected; however, it thereafter expressly

differentiated between the plaintiff’s non-protected disclosures of his own

misconduct with his protected disclosures of others’ wrongdoing. Watson, 64
F.3d at 1527 n.3. Even if we follow this line of reasoning in Watson, it merely

persuades us that Hackman is not protected from discharge for his own

hypothetical wrongdoing or disclosure of the same; he nevertheless is protected

from discharge as retaliation for exposing the wrongdoings of Heying and

Geschke.
                                        9

      The Plant cites to dicta in Marano expressing the Federal Circuit’s belief

that the federal Whistleblower Protection Act (WPA) does not protect an

employee who “blew the whistle on his own misconduct in an effort to acquire the

WPA’s protection.” Marano, 2 F.3d at 1142 n.5. This piece of dictum does not

contemplate an employee’s disclosure of his coworkers’ misconduct in tandem

with his own.

      We disagree with the Plant’s assertion that Hackman’s disclosures of

Heying’s and Geschke’s misconduct are not protected by Iowa Code section

70A.29 and its underlying public policy.    The Plant’s cited authorities do not

support its position.      The policy expressed in section 70A.29—to protect

employees who reveal the misconduct of their employers from retributive

discharge—applies to Hackman’s disclosures about Heying and Geschke, and

that policy would be undermined if Hackman’s disclosures served as a

determining factor in his discharge. See Berry, 803 N.W.2d at 109–10.

                B. “Disclosure”

      The Plant’s second assertion is that Hackman did not “disclose” any

information when he reported the scrap metal scheme to Throndson or worked

with the deputy in the ensuing investigation because the pertinent information

had already been “disclosed” by Hauser to Throndson two days before Hackman

did so. The statute specifically contemplates “a disclosure of any information

. . . the employee reasonably believes . . . evidences a violation of law or rule.”

Iowa Code § 70A.29(1) (emphasis added).

      “[S]tatutory words are presumed to be used in their ordinary and usual

sense and with the meaning commonly attributed to them.” Collins v. King, 545
                                             10
N.W.2d 310, 312 (Iowa 1996). The Plant argues the term “disclose” can only

mean the revelation of otherwise hidden information for the first time. Therefore,

it argues, Hackman could not have disclosed the misconduct because Hauser

had already done so two days prior.

       The authorities cited by the Plant in support of its argument are inapposite

to the claim made. It first quotes four English dictionaries, none of which reveal a

definition of the term “disclose” that would categorically exclude Hackman’s

reports of additional, new information to Throndson or his subsequent reports to

the deputy sheriff.

       The cases cited are distinguishable.          See Francisco v. Office of Pers.

Mgmt., 295 F.3d 1310, 1314 (Fed. Cir. 2002); Huffman v. Office of Pers. Mgmt.,

263 F.3d 1341, 1350 (Fed. Cir. 2001); Meuwissen v. Dep’t of Interior, 234 F.3d 9,

13 (Fed. Cir. 2000); see also Mize-Kurzman v. Marin Cmty. Coll. Dist., 136 Cal.

Rptr. 3d 259, 282 (Cal. Ct. App. 2012).5             Each of these cases deals with

disclosures of publicly known information, disclosures of wrongdoing to the

wrongdoer himself, or disclosures that were required as part of the employee’s

5
   The Plant relies on two further authorities. First, it misquotes a federal case—U.S. ex
rel. Nowak v. Medtronic, Inc., 806 F. Supp. 2d 310, 335 (D. Mass. 2011)—that does not
consider whistleblower protection. The language misquoted from Nowak concerns the
first-to-file requirement of qui tam actions filed by realtors under the federal False Claims
Act and is patently inapplicable to this case.
          Second, at oral argument, the Plant cited—over appellee’s objection and in
disregard of Iowa Rule of Appellate Procedure 6.908(5)—a case from the Missouri Court
of Appeals. See Hudson v. O’Brien, 449 S.W.2d 87, 92 (Mo. Ct. App. 2014). Though
the Plant ostensibly cited this case in support of its interpretation of the term “disclose,”
Hudson expressly rejects the Plant’s proposed interpretation, citing to recent
amendments to the WPA that abrogate prior federal court interpretations of “disclose”
similar to the interpretation proposed by the Plant. See id. at 93–94 (citing 5 U.S.C.
§ 2302(8)(f)(1) (Supp. 2014)). We further note Hudson relates specifically to the lower
court’s conclusion that whistleblower protections exclude disclosures made directly to
the alleged wrongdoer, which bears no factual resemblance to the case before us. Id.
                                       11

job.   Only the first of these three considerations could be relevant here.

However, Hauser’s prior report to Throndson did not render the scrap-metal

scheme “publicly known information” because Throndson had not begun to

investigate Hauser’s claim or discussed it with other authorities prior to

Hackman’s disclosure.

       Furthermore, the Plant’s argument concerning the definition of the term

“disclose” is not inherently persuasive. Interpreting section 70A.29 as the Plant

requests would create absurd results. Under the Plant’s reading of the statute, if

two employees simultaneously and independently discover the same illegal act

by their employer and each reports her discovery to an authority without

knowledge of the other’s report, the employer is free to retributively terminate

whichever employee was unfortunate enough to report second in time. “We seek

a reasonable interpretation that will best effect the purpose of the statute and

avoid an absurd result.” IBP, Inc. v. Harker, 633 N.W.2d 322, 325 (Iowa 2001)

(citation omitted). We therefore reject the Plant’s proposed interpretation of the

statute.

       The record shows that Hauser’s initial report to Throndson lacked

meaningful specificity. When Hackman and Hauser met with Throndson the next

day, Throndson had not yet had an opportunity to investigate, had no new

information, and had not publicly disclosed Hauser’s allegation.      The record

further shows Hackman provided Throndson and the deputy sheriff with

additional information not revealed by Hauser—including the photograph of the

scrap metal sale, information about when that transaction took place, and

information derived from Hackman’s personal interactions with Heying and
                                        12

Geschke.      Contrary to the Plant’s claim, Hackman disclosed information as

contemplated by Iowa Code section 70A.29.

      Hackman’s actions constituted disclosures that are protected by a clearly

defined and well-recognized public policy. We reject the Plant’s contrary claims

on appeal.

      IV. Determining Factor & Overriding Business Justification

      The Plant next claims the district court should have directed a verdict in its

favor because the record does not support a finding that Hackman’s disclosures

were the determining factor in the Plant’s decision to discharge Hackman. See

Teachout v. Forest City Cmty. Sch. Dist., 584 N.W.2d 296, 302 n.2 (Iowa 1998).

A “determining factor” in a decision to discharge an employee is a reason that

“tips the scales decisively one way or the other, even if it is not the predominant

reason behind the employer’s decision.” Deboom v. Raining Rose, Inc., 772
N.W.2d 1, 13 (Iowa 2009) (citations and internal quotation marks omitted).

      The Plant points to several facts to support its claim. First, though he

eventually left the Plant, Hauser—Hackman’s fellow whistleblower—was not

terminated.     Second, Hackman’s layoff occurred seven months after his

disclosure. Third, the decision to discharge Hackman was Quirk’s alone, was

preceded by “discipline incidents,” and was purportedly due to a lack of work.

      Our task on appeal is to review all the evidence in the light most favorable

to Hackman, even if it is contradicted by the evidence cited by the Plant. See

Dorshkind, 835 N.W.2d at 300. The record indicates the decision to terminate

Hackman was under consideration well before Quirk arrived at the Plant. The

email between the city clerk and the board’s chairman gives rise to a reasonable
                                         13

inference that the interim manager, the clerk, and the board were already

considering taking action against “the employee reporting issues.”6        The jury

submitted a question to the court during its deliberation asking for clarification on

the meaning of the email, apparently considering it to be significant evidence.

Though Quirk—not Rodas—ultimately discharged Hackman, the record supports

an inference that the Plant’s intent to discharge Hackman for “reporting issues”

preceded Quirk’s hiring as Plant manager.

       Additionally, the circumstances of Hackman’s suspension—ostensibly

resulting from incidents for which no other employee had been suspended

previously—and discharge—almost immediately upon his return from suspension

and intentionally in the presence of two of the men whose misconduct he had

reported—are additional evidence from which reasonable minds could conclude

Hackman’s protected disclosures were the determining factor in the Plant’s

decision to discharge him. The question was properly submitted to the jury,

which weighed and rejected the Plant’s contrary evidence. The district court

properly denied the Plant’s motion for directed verdict on this issue.

       Lastly, the Plant claims the district court should have granted its motion for

directed verdict because there was “uncontroverted evidence of an overriding

business justification” for Hackman’s discharge. See Rivera, 865 N.W.2d at 899.

It claims Hackman was discharged because there was no work for him and Quirk

6
  Though the email does not refer to Hackman by name, a juror could reasonably infer
he is the topic of discussion because, unlike Hauser, Hackman reported multiple other
issues with the Plant’s management both before and after the whistle was blown on the
scrap metal sales.
                                          14

discharged him to promote the Plant’s efficiency. It further claims the purported

reasons for Hackman’s suspension also support his discharge.

       It is the employer’s burden to prove an overriding business justification,

and the employer will prevail on that basis only “if it convinces the fact finder that

the legitimate business reasons supporting the action were so strong as to defeat

the conclusion that the protected conduct was the determining factor in the

adverse employment decision.”7 Id. The Plant failed to so convince the jury.

       Despite the Plant’s claim otherwise, evidence contrary to its assertion

exists in the record.    Though the Plant claims it never replaced Hackman’s

operator position following his discharge, it nevertheless hired two linemen and

trained both of them to perform operator duties, filling the gap Hackman left

behind. A reasonable juror could accept that evidence as adequate to reject the

Plant’s assertion Hackman was terminated for lack of work. A reasonable juror

could also reject Quirk’s asserted reasons for suspending Hackman since

evidence in the record indicates other employees engaging in the same activities

were not suspended or terminated.

       Hackman presented evidence that a reasonable juror could conclude

undermined and contradicted the Plant’s claim of an overriding business

justification for Hackman’s discharge. We affirm the district court’s denial of the

Plant’s motions for directed verdict.

7
  Our supreme court has recently acknowledged “there may be some relatively rare
circumstances when an employer is entitled to an affirmative defense of an overriding
business justification,” in which “the employer admits the protected conduct caused the
termination, but asserts another policy trumps the public policy asserted by the
employee.” Rivera, 865 N.W.2d at 899. The Plant makes no such claim in this case.
                                          15

       V. Appellate Attorney Fees

       Lastly, we have before us Hackman’s application for attorney fees on

appeal and its supporting affidavit.           Hackman cites Iowa Code section

70A.29(3)(a)8 as authority for this court to award appellate attorney fees, which

states, “[A] person who [discharges an employee as a reprisal for protected

disclosure]   is   liable   to   an   aggrieved   employee    for   affirmative   relief

including . . . any other equitable relief the court deems appropriate, including

attorney fees and costs.” Having affirmed the district court’s ruling on Hackman’s

section 70A.29 claim, having reviewed the affidavit of attorney fees on appeal,

and in consideration of the merits of the Plant’s appeal, we award Hackman

appellate attorney fees.

       Hackman requests $16,016.73 in appellate attorney fees. However, we

note the supporting affidavit includes $243.00 in attorney fees incurred arguing

issues before the trial court on November 11, 2014. Because that matter was not

related to this appeal, we award Hackman $15,773.73 in attorney fees.

       VI. Conclusion

       As to the Plant’s claim Hackman’s activities were not protected by Iowa’s

whistleblower laws, we affirm the district court. As to the Plant’s claim there was

insufficient evidence to submit the issues to the jury, we affirm the district court.

We award Hackman appellate attorney fees in the amount of $15,773.73.

       AFFIRMED.

8
  Hackman’s application cites section 70A.29(3)(b), but we conclude from the content of
his application he intended to cite to section 70A.29(3)(a).