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Smith v. Iowa State University of Science and Technology

Court of Appeal of Iowa

August 21, 2013

DENNIS L. SMITH, Plaintiff-Appellee,

Appeal from the Iowa District Court for Story County, Kurt J. Stoebe, Judge.

Defendants appeal from the trial court's denial of their motion for new trial and motion for judgment notwithstanding the verdict.

Thomas J. Miller, Attorney General, and Diane M. Stahle and Jordan G. Esbrook, Assistant Attorneys General, for appellants.

William W. Graham and Aimee R. Campbell of Graham, Ervanian & Cacciatore, L.L.P., Des Moines, for appellee.

Heard by Eisenhauer, C.J., and Vaitheswaran and Tabor, JJ.


The State and Iowa State University (collectively "ISU") appeal from the trial court's denial of their motion for judgment notwithstanding the verdict (JNOV) and for new trial after a jury returned a verdict in favor of Dennis Smith on his claim of intentional infliction of emotional distress and the trial court ruled in Smith's favor on his whistleblower claim. ISU contends the whistleblower claim fails because there was no protected conduct, no reprisal taken as a result of any report to a public official, and the damages are beyond the scope of relief allowed by the statute. ISU, in its appellate brief, contends the intentional-infliction-of-emotional-distress claim fails because ISU is immune from claims functionally equivalent to defamation and there was no outrageous conduct; however, at oral argument it contended this court and the trial court lacked subject matter jurisdiction because any injuries Smith may have suffered were work-related injuries subject to the exclusivity provisions of Iowa's Workers' Compensation Act.[1] After additional briefing on this issue, we conclude we have subject matter jurisdiction. We affirm in part and reverse in part.

I. Background Facts and Proceedings

Smith alleged a series of events from 2002 to 2008 surrounding his employment by IS U.Smith was hired in 2001 as a writer in the Engineering Communications and Marketing Department (ECM) of the College of Engineering at ISU. In 2002 his supervisor, Pamela Reinig, told Smith she would seek to have his job upgraded but did not do so. Beginning in 2005, Smith had some disagreements with Reinig, primarily concerning his job classification and supervisory duties because he discovered she had not requested his position be upgraded as she said she would. In 2006 Reinig hired Eric Dieterle as another writer in the ECM. In February 2007 Reinig told Smith his work and editing would be reviewed by Dieterle. On March 19, Smith met with Reinig about Dieterle supervising his work. Reinig considered Smith's behavior to be insubordinate, abusive, and threatening. On March 21, Reinig gave Smith a verbal reprimand as a result of the March 19 meeting.

In early 2007 Smith discovered what he thought was evidence the ECM was not properly billing an outside organization (CASE) for work performed. After discussing his concern with a colleague, Smith presented his concerns and the evidence to Mark Kushner, Dean of the College of Engineering on March 22 and requested confidentiality. Smith also met with the university ombudsman about his disagreements with Reinig. After Smith presented his concerns to Kushner, Kushner sought advice on the billing practices from Ellen Reints, the business manager of the college. On March 30, Kushner suggested he and Reints should meet with Reinig to give her "a heads up."

On April 9, Reinig sent a memo to Kushner outlining her planned reorganization of ECM, giving Dieterle more supervisory duties, and describing its effects on Smith. On April 12, Reinig notified Smith and Dieterle of the reorganization. Reinig also sent a message to a commander of the ISU police noting her reprimand of Smith and expressing her concern "about his potential to become violent." On April 13, Smith filed his first grievance.

Starting with the grievance filed April 13, 2007, and over the next two years, Smith pursued several grievances against Reinig and other administrators with allegations of mistreatment, mismanagement, and financial misconduct. As part of the appeal process to ISU President Geoffrey in the first grievance in August 2007, Smith also made allegations of financial misconduct against Reinig. Geoffrey ordered an internal audit. The audit revealed an organization with ties to Reinig was not billed for work done by the ECM, and Reinig personally received over $58, 000 from the organization for work done by the ECM, instead of depositing the payments in an ISU account. Reinig was put on administrative leave and resigned in March 2008 before she was terminated.

Starting in April 2007, Reinig falsely reported Smith to ISU police at least nine times, alleging Smith was a threat to safety and had a potential to become violent, and comparing Smith to the mass murderer at Virginia Tech. Dieterle and Kushner also were involved in reporting Smith as a threat to safety. Dieterle compared Smith to the Omaha mall shooter.

While contesting Smith's grievance concerning her failure to have his job classification raised, Reinig falsified Smith's employee reviews by lowering his performance rating, deleting a list of awards he had received, and deleting the language indicating she would seek reclassification of his position. Proof she falsified the records led to disciplinary action against her.

Kushner delayed the grievance process and summarily denied Smith's grievance. When Smith succeeded on appeal, Kushner ignored the directive to restore Smith's job duties for more than seven months. Kushner also did not comply with the decision to restore secure funding for Smith's position. Despite the problems Dieterle caused for Smith in January 2008, Kushner made Dieterle the interim supervisor to replace Reinig and in June 2008 made the appointment permanent. Dieterle continued to reduce Smith's assignments throughout 2008 and 2009.

Dieterle orchestrated a reorganization of the ECM, including eliminating the ECM and its entire staff, creating a new unit, and writing new job descriptions. Dieterle added qualifications to the new job description that basically disqualified Smith for the position. A coworker, upon seeing the revised job description would prevent Smith from qualifying, asked Dieterle about it and concluded from Dieterle's response the description was written purposefully to exclude Smith. Notes from a meeting Dieterle attended several months before Smith's employment was terminated in the reorganization show Smith was not included in the list of those "who stay."

On April 16, 2009, Smith filed a claim with the State Appeal Board. On April 17, he filed suit against the board of regents, ISU, Reinig, Kushner, and Dieterle. The petition alleged Reinig, Kushner, and Dieterle (1) defamed Smith; (2) intentionally interfered with Smith's employment, business, and professional relationships; (3) intentionally inflicted emotional distress; (4) violated Iowa Code section 70A.28 (protecting whistleblowers); and (5) conspired with each other to engage in the wrongful conduct alleged in counts one through four. The petition also alleged the conduct of Reinig, Kushner, and Dieterle violated the terms of Smith's employment with ISU, thus constituting a breach of contract by the regents and ISU.

After no action was taken on his claim with the appeal board, Smith withdrew the claim and filed a second suit against the board of regents, ISU, Reinig, Kushner, and Dieterle. The petition alleged (1) intentional infliction of emotional distress, (2) violation of Iowa Code section 70A.28, and (3) conspiracy to engage in the wrongful conduct. It also alleged ISU was vicariously liable for the acts of its employees.

The two suits were consolidated. After the State certified Kushner and Dieterle were acting within the scope of their employment, Smith dismissed the claims against them individually. See Iowa Code § 669.5. After a hearing on the scope-of-employment certification and the State's motion to dismiss, the court dismissed all claims against Kushner and Dieterle and substituted the State as a defendant. See id. The court also dismissed Smith's claims of defamation and intentional interference with contract rights against all defendants except Reinig.

The case was tried to a jury. However, the court determined the section 70A.28 (whistleblower) claim was equitable in nature and the court would determine damages, if any. After the close of evidence, Smith dismissed the defamation and intentional interference with contract rights claims against Reinig, and ISU agreed to defend her on the remaining claims as within her scope of employment. The court instructed the jury on intentional infliction of emotional distress and violation of the whistleblower statute and told the jury to decide liability on both claims, but damages on the emotional distress claim only.

The jury found ISU liable on both claims. It found damages in the amount of $500, 000 for intentional infliction of emotional distress. The court found damages on the whistleblower claim in the amount of $784, 027. The State and ISU filed a motion for JNOV and for new trial asserting (1) insufficient evidence to support the verdict on the intentional infliction of emotional distress claim, (2) immunity from claims functionally equivalent to defamation, (3) entitlement to a directed verdict on the whistleblower claim, and (4) excessive damages awarded by the jury. The court denied the motions.

II. Scope and Standards of Review

We review a district court's decision to deny a motion for JNOV for errors at law. Iowa R. App. P. 6.907; Van Sickle Constr. Co. v. Wachovia Commercial Mortg., Inc., 783 N.W.2d 684, 687 (Iowa 2010). In reviewing the court's decision, we must determine whether sufficient evidence existed to justify submitting the case to the jury. Crookham v. Riley, 584 N.W.2d 258, 265 (Iowa 1998). We view the evidence in the light most favorable to the nonmoving party. Royal Indem. Co. v. Factory Mut. Ins. Co., 786 N.W.2d 839, 846 (Iowa 2010).

"We review the district court's denial of a motion for a new trial based on the claim a jury awarded excessive damages for an abuse of discretion." WSH Props., LLC. v. Daniels, 761 N.W.2d 45, 49 (Iowa 2008) (citation and internal quotation marks omitted). A district court abuses its discretion if it rests its ruling on "clearly untenable or ...

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