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Mormann v. Iowa Workforce Development

Supreme Court of Iowa

June 15, 2018

MARLON MORMANN, Appellant,
v.
IOWA WORKFORCE DEVELOPMENT, Appellee.

          Appeal from the Iowa District Court for Polk County, Douglas F. Staskal, Judge.

         Former administrative law judge requests interlocutory review of the district court's dismissal of his failure-to-hire claim.

          Lori Bullock and Jill Zwagerman of Newkirk Zwagerman, P.L.C., Des Moines, and Nathaniel R. Boulton of Hedberg & Boulton, P.C., Des Moines, for appellant.

          Thomas J. Miller, Attorney General, and David L.D. Faith II and Jeffrey C. Peterzalek, Assistant Attorneys General, for appellee.

          APPEL, Justice.

         In this interlocutory appeal, Marlon Mormann, an applicant for the position of Deputy Workers' Compensation Commissioner at Iowa Workforce Development (IWD) calls upon us to determine whether the statutory requirement that complaints be filed with the Iowa Civil Rights Commission (ICRC) within 300 days of the discriminatory act may be tolled through application of the discovery rule or equitable estoppel. See Iowa Code § 216.15(13) (2015). If we determine these equitable tolling doctrines are available, Mormann asks us to find that he is entitled to avoid strict application of the 300-day filing requirement.

         The district court granted IWD's motion to dismiss Mormann's failure-to-hire claim. The court assumed equitable doctrines could apply to the 300-day filing requirement in the Iowa Civil Rights Act (ICRA) but concluded Mormann could not escape the filing limitation through application of the discovery rule or equitable estoppel. The court did not dismiss a constructive discharge claim brought by Mormann related to his departure from IWD on January 5, 2015, finding this claim was filed within the 300-day filing period.

         Mormann filed an application for interlocutory review, which we granted. For the reasons expressed below, we hold the equitable tolling doctrines of the discovery rule and equitable estoppel are available with respect to the 300-day filing limitation in the ICRA. We further hold, however, that Mormann is not entitled to toll the 300-day filing limitation through application of either the discovery rule or equitable estoppel. As a result, we affirm the decision of the district court.

          I. Factual and Procedural Background.

         A. Factual Background to Failure-to-Hire Claim.

         1. Introduction. Mormann worked for IWD from 1990 to 2015. During this period of time, he held a number of positions, including deputy workers' compensation commissioner. He also served as an administrative law judge in the workers' compensation division of IWD. At all times relevant to this case, Mormann was an administrative law judge in the unemployment insurance division of IWD.

         2. Application for position of deputy workers' compensation commissioner. In January 2014, Mormann applied for an open deputy workers' compensation commissioner position. Workers' Compensation Commissioner Christopher Godfrey chaired a hiring committee that interviewed and evaluated candidates. On February 19, Godfrey sent an email to Teresa Wahlert, the Director of IWD. In the email, Godfrey advised Wahlert that Erin Pals was the committee's top candidate.

         Godfrey explained to Wahlert why the committee favored Pals over Mormann. Godfrey noted Pals did not have as much experience as Mormann. Godfrey, however, told Wahlert that Mormann was not the top candidate because his resume and cover letter were brief; because of concerns that Mormann would not have a practitioner's perspective; because his past work for the division, though prompt, was sometimes short on analysis; and because after leaving his prior position of deputy workers' compensation commissioner he had not been active in the workers' compensation community. If Pals declined the position, however, Godfrey recommended the position be offered to Mormann.

         On March 7, Godfrey sent Mormann a letter informing him that he had not been selected for the position. Godfrey told Mormann,

I am writing to regretfully inform you that we have decided on an alternate candidate to fill the position of Deputy Workers' Compensation Commissioner. The decision was a difficult decision and as I mentioned before, you were one of the finalists for the position. You are clearly qualified for a Deputy Commissioner's position and I am certain that you would be a terrific addition to our staff. I encourage you to submit your application for future openings with the Division of Workers' Compensation, if you remain interested in our division.

         3. Deposition of Wahlert in the Godfrey matter related to failure to hire Mormann. On September 17, Wahlert gave a deposition in an unrelated case brought by Godfrey. Wahlert was asked a series of questions regarding the failure of IWD to offer the deputy commissioner position to Mormann. Wahlert stated that she did not agree with Godfrey's recommendation that if Pals declined the job, the position should be offered to Mormann. Wahlert testified, however, that "[they] never had to have that discussion" about her disagreement with the recommendation because "it really wasn't important unless [they] got to the point where [Godfrey] wanted to offer the job [to Mormann]." Wahlert further testified, "So, I never stated what my opinions were at that time." When asked to explain the basis for her disagreement with the recommendation that the position be offered to Mormann if Pals declined, Wahlert cited

statements that [Mormann] had made to people and during his interview that he thought he was going to retire. And so I was concerned that training and time would be invested and that perhaps more of a conversation needed to be had to be sure that the investment was appropriate for the long-term.

Wahlert's September 2014 deposition was originally taken under seal. It became public, however, on March 18, 2015.

         4. Mormann's complaint with the ICRC. On May 4, Mormann filed a complaint with the ICRC. In his complaint, Mormann stated he was born in November 1956, making him fifty-seven years old at the time of his application for the deputy workers' compensation commissioner position. Mormann challenged the decision of IWD and Wahlert not to hire him for the position.

         Iowa Code section 216.15(13) states that "a claim . . . shall not be maintained unless a complaint is filed with the commission within three hundred days after the alleged discriminatory or unfair practice occurred." Mormann recognized his complaint was filed more than 300 days after he received notice of the decision to hire another person as deputy workers' compensation commissioner. Mormann, however, noted the ICRA authorized the ICRC to establish rules, and the ICRC had adopted Iowa Administrative Code rule 161-3.3(3) pursuant to its rulemaking authority. This rule provides,

By law the filing period described in subrule 3.3(1) and in Iowa Code subsection 216.15[(13)] is subject to waiver, estoppel, and equitable tolling. Whether the filing period shall be equitably tolled in favor of a complainant depends upon the facts and circumstances of the particular case. Equitable tolling suspends the running of the filing period during the period of time in which the grounds for equitable tolling exist.

Iowa Admin. Code r. 161-3.3(3).

         Mormann argued he had no way to discover the age discrimination until after a district court "gag order" was lifted on March 18, 2015. Mormann claimed in his civil rights complaint that Wahlert intervened in the hiring decision but initially refused to explain the reason for rejecting Mormann for the position. Mormann, however, asserted Wahlert cited the fact that Mormann was too close to retirement as a basis for the decision. Wahlert did not advise Godfrey of her view on Mormann because it was not important unless it got to the point where Godfrey wanted to hire Mormann for the job. Given these facts, Mormann claimed the true reason he was not considered did not come out until Wahlert's deposition was released on March 18.

         Mormann attached exhibits to his complaint: (1) a news article dated March 18, 2015, stating that the depositions in the Godfrey matter were released; (2) a partial transcript of Wahlert's deposition; (3) a partial transcript of Governor Terry Branstad's deposition in the Godfrey matter; (4) the March 7, 2014 letter from Godfrey stating Mormann was not hired for the position of deputy commissioner but praising Mormann's qualifications and urging him to apply if other positions become available; and (5) the February 19 email from Godfrey to Wahlert explaining the search committee's recommendation of Pals over Mormann for the deputy workers' compensation commissioner position.

         In his complaint, Mormann sought reinstatement, back pay, front pay, attorneys' fees, and damages for outrageous conduct. Mormann obtained a right-to-sue letter from the ICRC and filed an action in district court on March 28, 2016.

         B. District Court Proceedings.

         1. Overview of petition. Mormann's district court petition alleged age discrimination in connection with the failure of IWD to offer him the deputy workers' compensation commissioner position.[1] He alleged that since 1990, he had been employed as a deputy workers' compensation commissioner or as an administrative law judge. At the time he was denied the job as deputy workers' compensation commissioner, Mormann alleged he was employed as an administrative law judge in the unemployment appeals bureau of IWD. According to Mormann, however, he had held the position of deputy workers' compensation commissioner twice before.

         Mormann alleged the position of deputy workers' compensation commissioner was given to "a younger candidate who had no prior experience in the role." He asserted Wahlert "not only influenced, but was directly involved in making hiring decisions" related to the deputy workers' compensation commissioner position.

         Mormann alleged the "real reason" he was denied the position surfaced only with the public release of Wahlert's deposition on March 18, 2015. Prior to that date, according to Mormann, the deposition of Wahlert was subject to a "gag order" placed on participants in the hiring process which "Wahlert employed regarding the Deputy Workers' Compensation Commissioner position." According to Mormann, the "Defendant's actions were done with the intent to prevent [the] Plaintiff from learning the reasons why he was not chosen for the Deputy Workers' Compensation Commissioner position."

         2. IWD's motion to dismiss: Procedural issue. IWD filed a motion to dismiss the petition. It argued Mormann's failure-to-hire claim should be dismissed. It asserted the district court lacked "subject matter jurisdiction or authority" because Mormann failed to file a complaint with the ICRC within 300 days of the discriminatory act or unfair practice. See Iowa Code § 216.15(13).

         IWD attached the same exhibits to its motion to dismiss that Mormann had attached to his petition. According to IWD, the court "may consider [the exhibits] on [a] motion to dismiss for the threshold jurisdictional question-to aid the Court in establishing facts relevant to jurisdiction and authority." So although IWD argued an evidentiary hearing was not necessary, it submitted exhibits to "aid the court in establishing facts."

         Mormann resisted the motion to dismiss. On the procedural issue, Mormann emphasized that motions to dismiss are rarely granted and "nearly every case will survive a motion to dismiss" under notice pleading. See Rees v. City of Shenandoah, 682 N.W.2d 77, 79 (Iowa 2004).

         Yet, citing Tigges v. City of Ames, 356 N.W.2d 503, 511 (Iowa 1984), Mormann conceded "[a]s correctly stated by the defendants in this case, a court must have subject matter jurisdiction to hear a case and that an evidentiary hearing is appropriate to determine whether subject matter jurisdiction is appropriate." Mormann further stated "[w]hether the . . . statute of limitation was tolled in this case, is dependent upon the facts of this particular case."

         Nonetheless, Mormann noted "fact specific or complicated questions involving the timeliness of a complaint are rarely resolved at this juncture in the proceedings." Ritz v. Wapello Cty. Bd. of Supervisors, 595 N.W.2d 786, 791 (Iowa 1999). He further asserted "[p]laintiff clearly alleged facts that there was no way that he could have known that he did not get the job based on an illegal reason."

         3. IWD motion to dismiss: Merits of equitable tolling. Turning to the merits of equitable tolling, IWD stated equitable doctrines could not be employed to toll the 300-day statute of limitations, but most of its arguments focused on whether Mormann alleged facts sufficient to invoke the doctrine. IWD argued even if there was a discovery rule, Mormann was on inquiry notice when he learned that a much younger person had been hired for a position for which Mormann was clearly qualified.

         According to IWD, equitable tolling arises only "when the plaintiff, despite all due diligence, is unable to obtain vital information bearing on the existence of his claim." Dorsey v. Pinnacle Automation Co., 278 F.3d 830, 836 (8th Cir. 2002) (quoting Dring v. McDonnell Douglas Corp., 58 F.3d 1323, 1328 (8th Cir. 1995)). According to IWD, however, Mormann was on notice of a potential claim prior to the public release of the Wahlert deposition. IWD emphasized that in order to make a prima facie case of age discrimination under the familiar McDonnell Douglas[2]framework, a plaintiff must show that "(1) [he or] she was a member of the protected group; (2) [he or] she was qualified to perform the job; (3)[he or] she suffered an adverse employment action; and (4)circumstances permit an inference of [age] discrimination." Lewis v. Heartland Inns of Am., L.L.C., 591 F.3d 1033, 1038 (8th Cir. 2010) (quoting Bearden v. Int'l Paper Co., 529 F.3d 828, 831 (8th Cir. 2008)). Clearly, IWD argued, Moorman was aware of the first three McDonnell Douglas criteria. On the last criterion, IWD argued, circumstantial evidence sufficient to draw an inference of age discrimination includes knowledge that an employer hired a younger person for the job. See Bearden, 529 F.3d at 832.

         Thus, according to IWD, the Wahlert deposition has nothing to do with knowledge that the plaintiff should have had about a potential age discrimination claim. Further, IWD argued Wahlert's statement has no bearing whatsoever as Pals was the first choice of the hiring committee and Pals accepted the offer.

         Mormann responded by asserting "the discriminatory reasons" for which he was not hired could not and would not have been known to him at the time of their occurrence. According to Mormann, situations like that presented by the late disclosure of reasons in Wahlert's deposition are why the ICRC promulgated Iowa Administrative Code rule 161- 3.3(3). Mormann asserted it makes no sense to require parties to file a complaint with the ICRC until they have evidence supporting their claim.

         Mormann also argued IWD deliberately hid from him the real reasons why he was not hired. According to Mormann, had the defendants been honest and told him the real reason why he was not hired, he would have known and been able to file a timely complaint with the ICRC. Mormann asserted he had no reason to believe that age discrimination was at work until he had access to the Wahlert deposition. Further, Mormann noted nothing in the letter he received from Godfrey gave him any indication the decision was made based on age. Mormann conceded in his resistance, however, that "[a]t the time [he] was passed over for the Deputy Workers' Compensation Commissioner job, he was aware that a younger worker, Erin Pals, was hired in his place."

         4. Hearing before the district court. The district court held a brief hearing on the matter. The district court opened the hearing by stating that the court was prepared to hear IWD's motion to dismiss. IWD stressed "there is no dispute at this point that applying the face of the statute that this case must be dismissed." Mormann argued facts had been concealed from him, namely, that Wahlert did not want to invest training resources in Mormann because of his intent to retire. Mormann briefly noted although IWD suggested there were reasons other than age for its failure to hire him, "those are discovery issues." Mormann noted IWD had not "produced any documents . . . in discovery to even let [him] know about any of that."

         The district court asked IWD whether the dispute should be more appropriately resolved in a summary judgment motion. IWD responded the court had an obligation to determine the facts on its jurisdictional authority and that oftentimes courts "will even hold an evidentiary hearing at the motion to dismiss level." As a result, IWD argued it would be appropriate for the court to ...


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