Court Opinion

ID: 4165736
Source: CourtListenerOpinion
Date Created: 2017-05-03 16:13:31.698632+00
Date Added: 2024-06-11T14:38:12.268454
License: Public Domain

IN THE COURT OF APPEALS OF IOWA

                                   No. 16-0287
                                Filed May 3, 2017

SUSAN ACKERMAN,
    Plaintiff-Appellant,

vs.

STATE OF IOWA, IOWA WORKFORCE DEVELOPMENT, TERESA
WAHLERT, TERESA HILLARY, and DEVON LEWIS,
     Defendants-Appellees.
________________________________________________________________

      Appeal from the Iowa District Court for Polk County, Scott D. Rosenberg,

Judge.

      A former administrative law judge challenges the dismissal of her tort

claim of wrongful discharge in violation of public policy.   REVERSED AND

REMANDED.

      William W. Graham and Wesley T. Graham of Graham, Ervanian &

Cacciatore, L.L.P., Des Moines, for appellant.

      Thomas J. Miller, Attorney General, and Jeffrey C. Peterzalek, Matthew T.

Oetker, and Susan J. Hemminger, Assistant Attorneys General, for appellees.

      Heard by Vaitheswaran, P.J., and Tabor and Mullins, JJ.
                                          2

TABOR, Judge.

       After being suspended from her position as an administrative law judge

(ALJ), Susan Ackerman sued her employer, the State of Iowa and Iowa

Workforce Development, as well as three individuals.1 Ackerman’s pleadings

eventually included the tort of wrongful discharge in violation of public policy,

among other claims. The State moved to dismiss the wrongful-discharge tort,

contending it was reserved for at-will employees and therefore not available to

Ackerman whose employment was subject to a collective bargaining agreement

(CBA). The district court granted the State’s motion, and Ackerman successfully

sought an interlocutory appeal.

       Ackerman divides her appellate argument into two parts, contending:

(1) the district court should not have considered the CBA’s terms in granting the

State’s motion to dismiss and (2) the district court incorrectly decided she was

prohibited from suing in tort for wrongful discharge because she was covered by

the CBA rather than being an at-will employee. We need not tackle Ackerman’s

first contention because the district court’s ruling rests on her status as a contract

employee and not on the CBA’s terms. But because her status as a contract

employee does not prevent her from pleading the claim of wrongful discharge,

we reverse the dismissal order and remand for further proceedings.

       I.     Facts and Prior Proceedings

       Ackerman worked as an ALJ with Iowa Workforce Development in its

unemployment insurance appeals bureau from 2000 until she was fired for

1
 The individual defendants are former Workforce Development director Teresa Wahlert,
as well as Teresa Hillary and Devon Lewis. In this opinion, we will refer to the
defendants collectively as the State.
                                            3

alleged misconduct in January 2015.2 During a suspension of several weeks

before the termination of her employment, Ackerman filed suit against the State,

alleging, among other things, that her employer retaliated against her after she

testified at a hearing before the Iowa Senate Government Oversight Committee

about “pressures put on the ALJs . . . to render decisions in favor of employers.”

See Iowa Code § 70A.28(2) (2015) (prohibiting an employer from retaliating

against a state employee for disclosing information to a member or employee of

the general assembly “if the employee reasonably believes the information

evidences a violation of law or rule, mismanagement, a gross abuse of funds, [or]

an abuse of authority”).

       On November 18, 2015, Ackerman filed her third amended petition, which

contained eight counts, including a claim for wrongful discharge in violation of

public policy. The State filed a motion to dismiss the wrongful-discharge count

on November 30, arguing that because Ackerman was covered by a CBA, she

could not bring a wrongful-discharge claim. In its motion, the State provided a

hyperlink to the Iowa Department of Administrative Services website, which

published the most up-to-date CBA between the State of Iowa and the American

Federation of State, County and Municipal Employees (AFSCME),3 and asserted

the district court could take judicial notice of the document.          The State also

attached a copy of an AFSCME grievance form Ackerman had filed.

2
  “Because we are reviewing the grant of a motion to dismiss for failure to state a claim,
we accept all well-pleaded facts as true.” Hedlund v. State, 875 N.W.2d 720, 722 (Iowa
2016).
3
   This CBA referenced on the website became effective on July 1, 2015, nearly six
months after Ackerman’s termination. Neither party raises this as an issue on appeal.
                                          4

        In her response, Ackerman acknowledged being “subject to a CBA that

allows for certain limited employee protections and remedies,” but she argued

that status did not prohibit her from bringing a tort claim and that her claim

survived a motion to dismiss because any analysis of whether she had an

adequate remedy under the CBA could not be determined “at this early stage in

the litigation.”

        After hearing argument from the parties, the district court granted the

motion to dismiss. The court concluded: “To the extent that the [CBA] provides

for a remedy relating to wrongful discharge, [Ackerman] is not allowed to apply

the narrow exception Iowa courts have reserved for at-will employment to her

current situation.”     Ackerman sought interlocutory review, which the supreme

court granted. The supreme court then transferred the case to us.

        II.        Scope and Standard of Review

        We review the grant of a motion to dismiss for correction of legal error.

See Dier v. Peters, 815 N.W.2d 1, 4 (Iowa 2012). “A motion to dismiss should

only be granted if the allegations in the petition, taken as true, could not entitle

the plaintiff to any relief.” King v. State, 818 N.W.2d 1, 9 (Iowa 2012) (citation

omitted); see also Iowa R. Civ. P. 1.421(1)(f).

        III.       Analysis

        Ackerman first argues it was impermissible for the district court to consider

the terms of the CBA in the context of the State’s motion to dismiss. See Dier,

815 N.W.2d at 4 (stating on a motion to dismiss, the court generally does “not

consider facts contained in either the motion to dismiss or any of its
                                            5

accompanying attachments” (citation omitted)). The State contests Ackerman’s

preservation of error on this claim.

       Assuming, but not deciding, Ackerman preserved error on her opening

contention, we may resolve this appeal without addressing whether the district

court could properly take judicial notice of the CBA’s contents.      In its order

dismissing Ackerman’s wrongful-discharge claim, the district court did not purport

to take judicial notice of the CBA or otherwise delve into the terms of the

document.      Instead, the district court referred generally to Ackerman’s

employment being “subject to a collective bargaining agreement, negotiated for

her and others in her position.” Moreover, at oral argument before our court,

counsel for both Ackerman and the State agreed the district court’s ruling relied

not upon any specific provisions of the CBA but upon the CBA’s existence (which

was acknowledged in Ackerman’s petition) and her status as an employee who

could be discharged for “just cause” only (a fact conceded by Ackerman). See

Grimm v. US W. Commc’ns, Inc., 644 N.W.2d 8, 12 (Iowa 2002) (“We address

issues presented in a motion to dismiss based on facts apparent on the face of

the petition or conceded by the plaintiff.”). Because the record presents no real

controversy between the parties on the judicial-notice issue, we decline to reach

its merits. See Hartford-Carlisle Sav. Bank v. Shivers, 566 N.W.2d 877, 884

(Iowa 1997) (“This court has repeatedly held that it neither has a duty nor the

authority to render advisory opinions.”).

       We focus instead on the headliner question: is the tort of wrongful

discharge in violation of public policy available to an individual whose
                                          6

employment is governed by a CBA?              A brief history of the common law

recognizing this cause of action helps structure our analysis.

       Nearly thirty years ago, the Iowa Supreme Court recognized the wrongful-

discharge tort in Springer v. Weeks & Leo Co., 429 N.W.2d 558, 559 (Iowa

1988). Springer held the cause of action exists “when the discharge serves to

frustrate a well-recognized and defined public policy of the state.” 429 N.W.2d at

560.   Just two months later, the court was confronted with a related issue:

“whether an employee covered by a [CBA] providing a contractual remedy for

discharge without just cause may maintain such an action.” Conaway v. Webster

City Prods. Co., 431 N.W.2d 795, 796 (Iowa 1988).

       In Conaway, two plaintiffs employed under a CBA containing a just-cause

provision and “a grievance and arbitration procedure to settle disputes, including

those involving employees’ discharges,” filed petitions alleging their discharge

violated the CBA and public policy. Id. The district court, acting without the

guidance of Springer, had predicted the supreme court would recognize the tort

of wrongful discharge but disposed of the claims by finding the action was

preempted by section 301 of the Federal Labor Management Relations Act

(FLMRA), 29 U.S.C. § 185(a) (granting federal courts subject matter jurisdiction

over suits involving CBA violations). Id. Accordingly, on appeal, the supreme

court directly addressed only the preemption issue, finding because the wrongful-

discharge claims at issue were “independent of the [CBA],” they were not

preempted by the FLMRA. Id. at 799. The court continued: “This is so because

resolution of these [wrongful-discharge] actions does not require an interpretation

of the [CBA].” Id. The court concluded:
                                         7

              The plaintiffs’ actions are recognizable state tort claims.
       They can be resolved without resorting to an interpretation of the
       [CBA], regardless of the discharge for just cause provision in the
       agreement. . . . Under this holding, the plaintiffs properly sued in
       state court without first going through [the grievance and arbitration
       procedures provided by the CBA].

Id. at 800.

       Seven years later, the supreme court again found the FLMRA did not

preempt a wrongful-discharge claim. Sanford v. Meadow Gold Dairies, Inc., 534

N.W.2d 410, 414 (Iowa 1995). The court, assuming the viability of Sanford’s

wrongful-discharge claim, reasoned: “Sanford’s retaliatory discharge claim rests

on our holdings that public policy is violated when an employee, even an

employee at-will, is discharged as a result of seeking workers’ compensation

benefits,” id. at 412, and: “[T]here is really no argument concerning the terms or

effect of the union contract. The union contract served only as background for

the issues here. All controverted issues involved routine state law,” id. at 414.

Cf. McMichael v. MidAm. Energy Co., No. 12-0597, 2012 WL 5356138, at *5

(Iowa Ct. App. Oct. 31, 2012) (finding arbitration decision pursuant to CBA, which

determined just cause for termination, did not preclude employee’s wrongful-

discharge claim because “[r]esolution of the [wrongful-discharge] claim does not

require interpretation of any provision of the CBA”).

       Despite the underlying facts in these preemption cases, the Iowa Supreme

Court has never directly decided whether the tort of wrongful discharge is

available to an individual employed under a CBA.         But following Sanford, a

federal district court faced the question now before us. See Beekman v. Nestle

Purina Petcare Co., 635 F. Supp. 2d 893, 919–21 (N.D. Iowa 2009). Relying on
                                           8

Conaway, the court held the plaintiff could assert the claim.4 Id. at 921; see also

Vails v. United Cmty. Health Ctr., Inc., No. C11-4048-LTS, 2012 WL 6045941,

*9–11 (N.D. Iowa Dec. 5, 2012) (citing Conaway and Sanford for the proposition

a written employment agreement did not preclude a plaintiff from pursuing a

wrongful-discharge claim); Ferrell v. IBP, Inc., No. C 98-4047, 2000 WL

34031485, at *2 (N.D. Iowa May 4, 2000) (“As the Court has stated in two prior

Orders, the tort of wrongful discharge is available to both at-will employees and

contract employees.”). But see Gries v. AKAL Sec., Inc., No. 06-CV-33-LRR,

2007 WL 2710034, at *35 n.14 (S.D. Iowa Aug. 27, 2007) (noting being an at-will

employee is “an obvious requirement for [a] public policy claim”); Clark v. Eagle

Ottawa, LLC, No. 06-CV-2028-LRR, 2007 WL 581650, at *5 (N.D. Iowa Feb. 20,

2007) (asserting plaintiff must demonstrate status as an at-will employee to state

a claim for wrongful discharge).

       Then, in 2014, a federal district court certified a similar question to our

supreme court: “Does Iowa law allow a contractual employee to bring a claim for

wrongful discharge in violation of Iowa public policy, or is the tort available only to

at-will employees?”       Hagen v. Siouxland Obstetrics & Gynecology, P.C.

(Hagen I), 964 F. Supp. 2d 951, 956 (N.D. Iowa 2013); see also Hagen v.

Siouxland Obstetrics & Gynecology, P.C. (Hagen II), No. 13-1372, 2014 WL

1884478, at *1 (Iowa May 9, 2014). Because the supreme court was equally

4
  Because the plaintiff claimed she was discharged for pursuing workers’ compensation
claims, the court also relied upon Iowa Code section 85.18 (2007) (“No contract, rule, or
device whatsoever shall operate to relieve the employer, in whole or in part, from any
liability created by [the workers’ compensation] chapter except as herein provided.”).
Beekman, 635 F. Supp. 2d at 921.
                                         9

divided on a preliminary point that was dispositive of the case, it declined to

answer the larger question.5 Hagen II, 2014 WL 1884478, at *1.

       Without direct guidance, the federal district court predicted the Iowa

Supreme Court would hold the tort of wrongful discharge was available to both

at-will and contract employees. Hagen v. Siouxland Obstetrics & Gynecology,

P.C. (Hagen III), 23 F. Supp. 3d 991, 1004 (N.D. 2014); see also Hagen I, 964 F.

Supp. 2d at 969–72. The court cited Conaway and Sanford and reasoned: “Had

the Iowa Supreme Court intended to limit the wrongful discharge tort to at-will

employees, it could have avoided the preemption issue and simply held that the

plaintiffs could not maintain a wrongful discharge claim as contractual

employees. But it did not . . . .” Hagen I, 964 F. Supp. 2d at 970. The federal

district court also addressed the policy behind the wrongful-discharge tort:

       [T]he purpose . . . is best served by applying the tort to both
       contractual and at-will employees. . . . Whether an employer’s
       choice to fire an employee violates Iowa’s ‘communal conscience’
       is completely independent of whether the fired employee was at-will
       or contractual.    The firing in either case harms ‘the entire
       community’—i.e., the public—which has an interest in discouraging
       employers from firing employees in violation of Iowa’s public policy.

Id. at 971.

       The federal circuit court reversed, finding that because the employee had

a contractual remedy for wrongful discharge and no statute clearly prohibited his

discharge for the conduct at issue, his sole remedy was a breach-of-contract

claim. Hagen v. Siouxland Obstetrics & Gynecology, P.C. (Hagen IV), 799 F.3d

922, 930–31 (8th Cir. 2015). The circuit court did not consider either Conaway or

5
 The court was divided on the question whether the employee participated in protected
conduct that could be the basis for a wrongful-discharge claim. Hagen II, 2014 WL
1884478, at *1.
                                         10

Sanford and instead focused on Iowa’s wrongful-discharge cases that involved

non-contractual, at-will employees: “The Supreme Court of Iowa initially

recognized this tort as a ‘narrow exception[] to the employment at-will doctrine’

and has consistently described the tort in those terms.”         Id. at 928 (citation

omitted). The court opined the supreme court’s refusal to address the district

court’s certified question “strongly suggest[ed] that the district court erred in

defining the question as being whether the tort protects ‘contractual employees’

in general.” Id. at 929. Instead, the circuit court concluded, the availability of the

wrongful-discharge tort depends upon the way the employment contract

“address[es] the question of termination.” Id.

       Relying on Conaway, 431 N.W.2d at 796–800, Ackerman argues, under

Iowa law, employees covered by a CBA have a recognizable tort claim for

wrongful discharge, regardless of the specific terms of the CBA. She contends

barring her claim would be against public policy because it “would allow

employers to contractually eviscerate the protections provided by the tort claim,

and give employees working under a CBA less protection against violations of

public policy than at-will employees.” Finally, she asserts that “at the very least,”

it was inappropriate for the district court to dismiss her claim at this stage

because the question whether the CBA provides the same protections as the

wrongful-discharge tort is a question of fact.

       The State labels Conaway inapplicable because in that case the supreme

court contemplated only the issue of preemption under section 301 of the

FLMRA. The State defends the dismissal of Ackerman’s claim by citing a string

of supreme court cases describing wrongful discharge in violation of public policy
                                         11

as an “exception to the employment-at-will doctrine,” see, e.g., Jasper v. H.

Nizam, Inc., 764 N.W.2d 751, 761 (Iowa 2009), and extrapolates from those

descriptions that the tort should exist exclusively for at-will employees.6

       The State’s reasoning is flawed. To assume because Jasper and its ilk

hold at-will employees may sue for wrongful termination in violation of public

policy then employees who do not work at will may not sue for wrongful

termination in violation of public policy “is to commit 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.” See NLRB v. Noel Canning, 134 S. Ct.

2550, 2603 (2014) (Scalia, J., concurring in the judgment); see also Posen

Const., Inc. v. Lee Cty., 921 F. Supp. 2d 1350, 1364 (M.D. Fla. 2013) (“The

problem with denying the antecedent [P] is that there is a logical disconnect

between the antecedent [P] and the consequent [Q] such that the predictive

behavior of the consequent [Q] is not accurately linked to the nonoccurrence of

the antecedent [P].”). The willingness of the Iowa Supreme Court to carve out a

narrow exception to the at-will doctrine for firings that violate public policy does

not logically foreclose Iowa courts from recognizing a wrongful-discharge tort for

contract employees.

       The State asserts the federal circuit court correctly forecast that our

supreme court would not recognize a wrongful-discharge tort for contract

employees because the exception for at-will employees was “narrowly

circumscribed to only those policies clearly defined and well-recognized to

6
  The State does not argue Ackerman’s claim is preempted by Iowa Code section
70A.28 or precluded by any arbitration decision under the CBA.
                                           12

protect those with a compelling need for protection from wrongful discharge.”

See Hagen IV, 799 F.3d at 929 (quoting Dorshkind v. Oak Park Place of

Dubuque II, L.L.C., 835 N.W.2d 293, 303 (Iowa 2013) (emphasis added)). We

are not convinced the passage italicized by the circuit court supports its

conclusion that a contract employee could not sue for wrongful discharge in

violation of public policy. Our supreme court’s circumscription has involved the

type of public policies that qualify for protection, not the type of employees

protected.7 See Dorshkind, 835 N.W.2d at 303 (explaining supreme court will

“cautiously identify policies to support an action for wrongful discharge”). The

Dorshkind language does not signal the Iowa Supreme Court’s intent to ration

tort-law remedies to at-will employees because they have a more “compelling

need for protection from wrongful discharge” than the need of contract

employees for protection against being fired in violation of public policy.

       Moreover, Hagen involved an individual employment agreement, not a

CBA. Unlike an individual employment agreement,

       decisions to enter [CBAs] are made by majority vote. Thus, a
       number of employees who may have voted not to enter into the
       agreement are forced to accede to the will of the majority. The
       employee subject to a [CBA] whose individual right has been
       violated, is forced to submit his grievance under an agreement

7
  In addition, we find Harvey v. Care Initiatives, Inc., 634 N.W.2d 681, 682 (Iowa 2001),
which the Hagen IV court cites at length, to be distinguishable. In Harvey, the Iowa
Supreme Court held “there is no cause of action in Iowa for retaliatory discharge of an
independent contractor for filing a complaint against a care facility.” 634 N.W.2d at 682.
While some of the reasoning in the opinion, which both the State and the Hagen IV court
highlighted, suggests the existence of a contract removes some of the need for the
wrongful-discharge claim, the outcome in Harvey also depended upon the
“fundamental,” “long-standing” distinction between independent contractors and
employees. 634 N.W.2d at 683–84. Considering the differences between CBAs and
individual contracts as well as between independent contractors and employees, we
conclude Harvey does not control the outcome here.
                                           13

       which was never designed to protect individual workers, but to
       balance the individual against the collective interest.

Coleman v. Safeway Stores, 752 P.2d 645, 652 (Kan. 1988), disapproved of on

other grounds by Gonzalez-Centeno v. N. Cent. Kan. Reg’l Juvenile Det. Facility,

101 P.3d 1170, 1175 (Kan. 2004). Accordingly, employees subject to a CBA

have the same “compelling need for protection from wrongful discharge” as at-

will employees.

       We are unpersuaded by the circuit court’s decision in Hagen IV, which

failed to recognize either Conaway or Sanford—cases in which our supreme

court recognized the validity of a wrongful-discharge cause of action brought by

contract employees.8 See Conaway, 431 N.W.2d at 800 (describing wrongful-

discharge claims of individuals employed under a CBA as “recognizable state tort

claims”); see also Sanford, 534 N.W.2d at 412 (describing wrongful-discharge

claim of individual employed under a CBA as “rest[ing] on our holdings that public

policy is violated when an employee, even an employee at-will, is discharged as

a result of seeking workers’ compensation benefits”). Accordingly, we conclude

Ackerman’s status as an individual employed under a CBA does not prevent her

8
  As Ackerman points out, this finding is consistent with several other jurisdictions that
have considered this issue. See, e.g., Davies v. Am. Airlines, Inc., 971 F.2d 463, 468–
69 (10th Cir. 1992) (applying Oklahoma law); Midgett v. Sackett-Chi., Inc., 473 N.E.2d
1280, 1283–84 (Ill. 1984); Coleman, 752 P.2d at 652; LePore v. Nat’l Tool & Mfg. Co.,
557 A.2d 1371, 1372 (N.J. 1989); Retherford v. AT&T Commc’ns of Mountain States,
Inc., 844 P.2d 949, 959–60 (Utah 1992); Smith v. Bates Tech. Coll., 991 P.2d 1135,
1141 (Wash. 2000).
                                       14

from pleading the tort of a wrongful discharge made in retaliation for testifying

before the Iowa Senate Government Oversight Committee.

      REVERSED AND REMANDED.