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Ackerman v. State

Supreme Court of Iowa

June 15, 2018

SUSAN ACKERMAN, Appellant,
v.
STATE OF IOWA, IOWA WORKFORCE DEVELOPMENT, TERESA WAHLERT, TERESA HILLARY, and DEVON LEWIS, Appellees.

         On review from the Iowa Court of Appeals.

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

         A former administrative law judge whose employment was covered by a collective bargaining agreement challenges the dismissal of her tort claim of wrongful discharge in violation of public policy for failure to state a claim.

          Wesley T. Graham and William W. Graham of Graham, Ervanian & Cacciatore, L.L.P., Des Moines, for appellant.

          Thomas J. Miller, Attorney General, Jeffrey S. Thompson, Solicitor General, Jeffrey C. Peterzalek, Matthew T. Oetker, and Susan J. Hemminger, Assistant Attorneys General, for appellees.

          CADY, CHIEF JUSTICE.

         A 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, 875 N.W.2d 720, 722 (Iowa 2016).

         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 Manager 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., 803 N.W.2d 106, 108 (Iowa 2011). In reviewing the order, "[w]e view the petition in the light most favorable to the plaintiff, and will uphold dismissal only if the plaintiff's claim could not be sustained under any state of facts provable under the petition." Id. (alteration in original) (quoting Griffen v. State, 767 N.W.2d 633, 634 (Iowa 2009)).

         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., 345 N.W.2d 131, 134 (Iowa 1984). This body of law is derived from the principles, traditions, and practices developed by courts through the process of justice and allows the civil law to grow and change from one generation to the next in response to changes observed in the needs and values of society. In many ways, the process is part of the foundation of the work of courts in our democratic society and one of the most important components of the legal process itself.

         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., 429 N.W.2d 558, 560-61 (Iowa 1988). In Springer, an at-will employee was discharged from her employment for pursuing a workers' compensation claim against her employer. Id. at 559. While our laws at the time had developed a remedy for tortious interference with a contractual relationship, no remedy existed to protect at-will employees, even from discharge based on reasons that violated or frustrated a well-recognized and defined public policy of our state. Id. at 561. In the absence of such a remedy, we adopted a cause of action for tortious termination in violation of public policy. Id.

         In Springer, we found that our state recognized a public policy for workers to seek compensation for work-related injuries. Id. at 560. This policy was clearly expressed in the workers' compensation statute, and the absence of a remedy for at-will employees for discharge in retaliation for pursuing these rights would frustrate and undermine this well-defined policy. Id. at 560-61. We acknowledged that contract employees ordinarily have adequate remedies, but did not specifically restrict the new tort to noncontract employees. Id. at 561 n.1.

         On the heels of Springer, we were presented with the question in Conaway v. Webster City Products Co., 431 N.W.2d 795, 797 (Iowa 1988), whether a claim by a CBA-covered employee for retaliatory discharge for filing a workers' compensation claim was preempted by the Labor Management Relations Act. The CBA at issue contained a "grievance and arbitration procedure to settle disputes, including those involving employees' discharges." Id. at 796. We held the claims were not preempted by the Act and that the plaintiffs did not need to exhaust the procedures under the CBA before proceeding to state court on its claims. Id. at 799-800. Without specifically addressing whether the newly recognized tort of retaliatory discharge was available to contract employees, we recognized that the claim for retaliatory discharge brought by the employees was independent of the CBA. Id. at 800. We concluded that the claims were "recognizable state tort claims." Id. Accordingly, while the plaintiffs in the case were not at-will employees, we made no suggestion that the new tort was not available to them.

         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., 764 N.W.2d 751, 762 (Iowa 2009) ("[O]ur wrongful-discharge cases that have found a violation of public policy can generally be aligned into four categories of statutorily protected activities: (1) exercising a statutory right or privilege; (2) refusing to commit an unlawful act; (3) performing a statutory obligation; and (4) reporting a statutory violation." (Citations omitted.)). One general category includes retaliatory discharge for performing a statutory obligation, such as providing truthful testimony. Id. In Fitzgerald v. Salsbury Chemical, Inc., 613 N.W.2d 275, 286 (Iowa 2000), we recognized a clear public policy in Iowa to provide truthful testimony in legal proceedings. In turn, we found the policy supported a tort claim based on retaliation for intending to testify in a ...


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