Karen Dorshkind v. Oak Park Place of Dubuque II, L.L.C. , 835 N.W.2d 293 ( 2013 )

IN THE SUPREME COURT OF IOWA
No. 11–2100
Filed August 2, 2013
KAREN DORSHKIND,
Appellee,
vs.
OAK PARK PLACE OF DUBUQUE II, L.L.C.,
Appellant.
On review from the Iowa Court of Appeals.
Appeal from the Iowa District Court for Dubuque County,
Michael J. Shubatt, Judge.
An employee and an assisted living facility seek further review of a
court of appeals decision affirming a judgment for wrongful termination
and reversing a judgment awarding punitive damages. DECISION OF
COURT OF APPEALS AFFIRMED; DISTRICT COURT JUDGMENT
AFFIRMED IN PART AND VACATED IN PART, AND REMANDED WITH
DIRECTIONS.
Thomas D. Wolle of Simmons Perrine Moyer Bergman PLC, Cedar
Rapids, and Thomas R. Crone of Melli Law, S.C., Madison, Wisconsin, for
appellant.
Mark L. Zaiger and Drew Cumings-Peterson of Shuttleworth &
Ingersoll, P.L.C., Cedar Rapids, for appellee.
2
Ryan G. Koopmans of Nyemaster Goode, P.C., Des Moines, for
amicus curiae Iowa Association of Business and Industry.
3
WIGGINS, Justice.
In this appeal, we must decide if an internal complaint by an
employee against an assisted living facility concerning forged training
documents, which the state mandates, gives rise to a wrongful-
termination action. The district court determined a wrongful-termination
suit lies and submitted the case to the jury. The jury returned a verdict
against the assisted living facility for actual and punitive damages. The
facility appealed. We transferred the case to the court of appeals. The
court of appeals affirmed the actual damages claim but reversed on the
punitive damages issue. Both parties asked for further review, which we
granted. On further review, we affirm the decision of the court of appeals
(1) because the employer’s retaliatory discharge of an at-will employee,
who internally reported her employer’s forgery of state-mandated training
documents, violated public policy; and (2) because punitive damages are
not recoverable, due to the fact that at the time of the employee’s
wrongful discharge we did not recognize a public-policy exception to the
at-will employment doctrine based upon a violation of administrative
rules. Accordingly, we remand the case to the district court to enter
judgment consistent with our decision.
I. Facts and Prior Proceedings.
A. Facts. This appeal arose from the district court’s denial of a
motion for directed verdict. Accordingly, we review the facts in the light
most favorable to the party against whom the motion for directed verdict
was made. Iowa R. App. P. 6.904(3)(b); Fly v. Blauvelt, 818 N.W.2d 123,
134 (Iowa 2012). Because Oak Park made the motion for directed
verdict, we review the facts in the light most favorable to Karen
Dorshkind.
4
Oak Park Place in Dubuque is an assisted living facility.
Alternative Continuum of Care owns the Dubuque facility, as well as a
network of other assisted living homes all named Oak Park.
Headquarters for the company is in Madison, Wisconsin.1
Oak Park contains 131 beds and has fifty-five employees who
provide patients with several different levels of care. The lowest level of
care includes the administration of medications, assistance with bathing
and dressing, and help with mobility to and from meals.
Oak Park is also certified as a dementia-specific assisted living
program. This means the facility holds itself out as providing specialized
care in a dedicated setting for patients with dementia but may also
provide care to patients without cognitive disorders. In late 2008, Oak
Park had approximately thirteen patients in its dementia program.
Because Oak Park includes a special unit for its patients suffering
from dementia, Oak Park is subject to the provisions in Iowa Code
chapter 231C (2007) and the Iowa Administrative Code rule 321—
25.34(1) (2006),2 which require direct care staff to complete dementia-
specific training. Forgery of documents certifying completion of this
training constitutes a violation of law. See Iowa Code § 231C.14(1), (3)
(imposing civil penalties for noncompliance with regulations and
interfering in any way with an Iowa Department of Inspections and
Appeals (DIA) representative). The DIA is responsible for enforcing these
provisions. Iowa Admin. Code r. 321—26.3.
1References hereafter in the opinion to “Oak Park” refer only to the Dubuque
facility, unless specifically stated otherwise.
2The rules pertaining to elder care in the Iowa Administrative Code have been
restructured since 2008. These rules are now located under the Iowa Department of
Inspections and Appeals (Agency 481) in chapter 69. See Iowa Admin. Code r. 481—
69.30(1)–(5).
5
Dorshkind worked at Oak Park from April 10, 2006, to
September 5, 2008. Dorshkind was hired as an at-will employee for the
position of sales and marketing assistant. About six months later, Oak
Park promoted her to marketing director. Dorshkind’s primary
responsibility was to increase the number of patients at Oak Park.
For the first two years of her employment, Dorshkind’s supervisor
was Marthe Jones, the regional marketing director. Thereafter, in April
2008, Dorshkind began reporting to Tim Hendricks, the housing director
for Oak Park. Hendricks reported to Toni Carruthers, the regional
director of operations. Carruthers, in turn, was supervised by Scott
Frank, the CEO and majority owner of the Oak Park network.
During an unannounced inspection by the DIA on July 24, 2008,
Dorshkind witnessed what she believed to be her supervisor, Hendricks,
and the supervisor of the certified nursing assistants at Oak Park, Kristi
Niemer, falsifying state-mandated training documents for the dementia
program. Dorshkind testified that she witnessed Niemer making copies
of test papers and then later saw Niemer with Hendricks in his office with
some stacks of paper. Niemer was filling out answers to what appeared
to be true or false questions. Hendricks had another pile of papers and
was writing on them. A different stack of papers was stamped “post-test”
at the top. Eyewitnesses testified that the two did not attempt to hide
what they were doing. Instead, Hendricks and Niemer told other
employees that their acts were going to “save the day for Oak Park.”
Dorshkind left Hendricks’ office and returned to her own. Pat
True, the director of maintenance at Oak Park, later came by and said he
had also seen Niemer and Hendricks forging training documents. True
had been called into Hendricks’ office to sign a paper. At that time, he
observed the two forging other employees’ names. True told Hendricks
6
he should at least use different colored pens to vary the signatures he
was forging on the documents. Hendricks later laughed and recounted
the comment to Denise Schiltz, the director of nursing at Oak Park, who
also witnessed the incident.
Schiltz told Dorshkind she had seen Hendricks and Niemer forging
staff names on the dementia training documents. During testimony,
Schiltz said that none of the training certified in the documents ever
occurred. Schiltz realized Hendricks and Neimer’s conduct constituted
forgery and immediately submitted her resignation on July 24.
For obvious reasons, Dorshkind did not report these concerns to
her then-supervisor, Hendricks. Approximately six weeks after the
incident, Dorshkind called Jones, her former supervisor who was then
working as the marketing director in Madison, which was not a
supervisory position and did not involve human resources
responsibilities. Jones described her relationship to Dorshkind as a
coworker or peer. Jones admitted that at the time of the report, there
was no supervisor–subordinate relationship between her and Dorshkind.
Dorshkind told Jones about the suspected forgery. During her
testimony, Dorshkind explained her rationale for doing so as follows:
“Well, my concern was, number one, for the residents. If tests had been
falsified, I felt that meant that the staff hadn’t had the training. My first
concern was always the residents.” Dorshkind was also concerned Oak
Park would lose its license. While speaking with Jones, Dorshkind
additionally communicated her belief that two employees, including her
supervisor, were having an extramarital affair.
When testifying regarding her conversation with Jones, Dorshkind
stated that Jones asked Dorshkind if she wanted Jones to talk to Tara
Klun, the director of human resources for Oak Park at the Madison
7
headquarters. Jones testified, “I said, Karen, I don’t know what to do.
Would you like me to go to human resources and talk to them and see
what path you should take?” Later, Jones added, “I told [Dorshkind] I
would talk to Tara Klun and ask her what she should do in this
situation.”
Dorshkind believed the internal report was a collaborative effort,
even though Jones said she was the first one to raise the question of
whether it should be reported to Klun. Dorshkind had gone to Jones to
get “Marthe’s advice.” However, Dorshkind testified that Jones believed
her going to Klun “would be the best way that we can handle any
situation.”
Jones spoke with Klun on September 3. Klun testified that “she
understood at the time that Ms. Dorshkind and Ms. Jones had just
completed a telephone call before [Jones] came into [Klun’s] office to
talk.” During Jones’s conversation with Klun, Jones reported, “Karen
Dorshkind called me today” and said “Kristi and Tim were falsifying
documents.” Jones specifically stated that the “falsification that had
occurred,” as well as “an illicit personal relationship,” “[wa]s reported by
Ms. Dorshkind.” Jones said, “[W]e [meaning Dorshkind and Jones] don’t
know what to do.”
Klun informed the CEO of both allegations. Klun testified that if
an employee has a problem and wants to make a report, the employee
“would follow the chain of command and go to their supervisor, and if
they didn’t feel comfortable, to the next level and/or human resources.”
On September 4, 2008, Klun and Carruthers went to Oak Park to
investigate the claims. Immediately when Klun arrived, Dorshkind
approached her and said, “Tara, I’m glad you’re here. Can I talk to you
alone[?]” Klun responded, “not now . . . let’s wait until we can talk in
8
private.” Klun never spoke with Dorshkind privately to inquire about
what she knew regarding the allegation, which Klun admits, “that she
reported.” During her testimony, Klun explained her rationale for not
approaching Dorshkind as follows:
I believe that she would not have anything further
than what Marthe Jones shared with me, for she shared the
full conversation that she had with Karen. And at the time I
did not feel that she would give me any new information on
the 4th of September.
Klun later reiterated on cross-examination that she believed Jones
“shared with me the entirety” of Dorshkind’s information regarding the
allegations. Jones was the first person who reported the forgery to Klun.
After conducting a two-day investigation, both Klun and
Carruthers concluded there was no validity to Dorshkind’s report of
forgery and an affair. Klun later admitted that her investigation of the
forgery allegations was “very poor.”
The following day, Oak Park terminated Dorshkind’s employment.
In a letter signed by Klun and Carruthers, the basis for the termination
was stated as follows:
After a long 2 day and careful investigation, speaking with
many individuals, ones you specifically mentioned, we have
come to a conclusion that you have not been truthful. Upon
the investigation we learned of several incidents where you
have not been truthful; spreading rumors regarding a false
relationship between two employees, malicious statements
regarding forging of documents, and false statement to a
Regional Director about move in numbers, all with in these
two days. This is jeopardizing and affecting the working
environment at Oak Park.
Due to the above issues, we are at a point where we are
unable to trust you. Therefore, it is in Oak Park’s best
interest to end the relationship effective immediately.
(Emphasis added.) Jones was also fired.
9
On September 25 and 29, after receiving a complaint from Schiltz
about the incident on July 24, the DIA conducted an on-site
investigation at Oak Park. In its final report, the DIA concluded certain
state-mandated documents relating to the dementia training program
had been forged. Accordingly, the DIA imposed a civil penalty of $10,000
and barred the facility from admitting any new patients while under
conditional certification status.
B. Prior Proceedings. On September 7, 2010, Dorshkind sued
Oak Park for wrongful discharge of employment in violation of public
policy. Oak Park responded by filing a motion for summary judgment,
arguing no established public policy protects Dorshkind’s activity
because she did not report the alleged misconduct externally to the DIA,
but rather, only internally. Thus, Oak Park urged the district court to
find Dorshkind’s termination does not jeopardize public policy. Oak Park
also alleged there was an overriding business justification for the
discharge.
The district court denied the motion. The matter proceeded to a
jury trial on November 15, 2011. Before resting, Dorshkind moved the
district court to present the issue of punitive damages to the jury. Oak
Park resisted, claiming Iowa has not previously recognized the public
policy asserted by Dorshkind, and thus, punitive damages are not
recoverable. The district court granted Dorshkind’s motion and rejected
Oak Park’s argument. The district court held:
There is a defined public policy to protect residents in
assisted living facilities, particularly those who suffer from
dementia. Toward that end, the State requires training to
ensure that people with dementia receive proper care and are
not abused in any manner. That is the purpose of the
regulation.
10
Accordingly, the district court allowed the question of punitive damages
to be submitted to the jury.
Oak Park then moved for directed verdict on the same grounds as
the motion for summary judgment. The district court denied the motion
without explanation.
The jury returned a verdict for Dorshkind, finding Oak Park
terminated her in retaliation for whistleblowing and with a willful and
wanton disregard for the rights or safety of others. Accordingly, the jury
awarded $178,500 in compensatory damages, including $156,000 in lost
pay and benefits and $22,500 in emotional distress damages. The jury
award also included $178,500 in punitive damages. The district court
entered judgment on November 22.
Oak Park timely filed a notice of appeal. We transferred the case to
the court of appeals. The court of appeals affirmed the district court
judgment in part by finding the public-policy exception protected
Dorshkind’s employment from retaliatory termination and consequently,
concluded the district court properly denied Oak Park’s motion for
directed verdict. However, the court of appeals reversed the district
court’s decision to submit the issue of punitive damages to the jury. The
court of appeals held “there has been no specific declaration by our
courts or legislature that internal whistleblowing may be protected under
certain circumstances.”
Both parties sought further review, which we granted.
II. Issues.
The first issue is whether an at-will employee, who was discharged
by her employer after making an internal report of forgery regarding
state-mandated documents certifying dementia training, is protected
from retaliatory termination under the public-policy exception to the at-
11
will employment doctrine. The second issue asks whether an at-will
employee who is wrongfully discharged based upon a violation of
administrative rules may recover punitive damages.
III. Standard of Review.
This appeal arises from the district court’s denial of a motion for
directed verdict. Thus, our review is for correction of errors at law.
Estate of Ryan v. Heritage Trails Assocs., Inc., 745 N.W.2d 724, 728 (Iowa
2008). We review the evidence in the light most favorable to the
nonmoving party, taking into consideration all reasonable inferences that
could fairly be made by the jury, regardless of whether the evidence is
contradicted. Slocum v. Hammond, 346 N.W.2d 485, 494 (Iowa 1984).
Our role on appeal is to decide “whether the trial court correctly
determined there was sufficient evidence to submit the issue to the jury.”
Easton v. Howard, 751 N.W.2d 1, 5 (Iowa 2008).
IV. Analysis.
A. At-Will Employment. Employment in Iowa is at will. Berry v.
Liberty Holdings, Inc., 803 N.W.2d 106, 109 (Iowa 2011). Therefore,
unless the employee has a valid contract of employment, “the
employment relationship is terminable by either party ‘at any time, for
any reason, or no reason at all.’ ” Fitzgerald v. Salsbury Chem., Inc., 613
N.W.2d 275, 280 (Iowa 2000) (quoting Phipps v. IASD Health Servs. Corp.,
558 N.W.2d 198, 202 (Iowa 1997)). Yet, the employer’s right to discharge
an employee under an at-will employment contract may be limited by
public policy considerations. Teachout v. Forest City Cmty. Sch. Dist.,
584 N.W.2d 296, 299 (Iowa 1998).
B. Public-Policy Exception. Iowa follows the majority of states
by carving out a public-policy exception to the general rule of at-will
employment for wrongful-discharge claims. See Springer v. Weeks & Leo
12
Co., 429 N.W.2d 558, 560 (Iowa 1988) (adopting the public-policy
exception in Iowa).
Public policy is an elusive legal construct. We have previously said
public policy is that which “ ‘generally captures the communal
conscience and common sense of our state in matters of public health,
safety, morals, and general welfare.’ ” Berry, 803 N.W.2d at 110 (quoting
Jasper v. H. Nizam, Inc., 764 N.W.2d 751, 761 (Iowa 2009)). Another
definition includes those matters “fundamental to citizens’ social rights,
duties, and responsibilities.” Id. Once identified, the public policy
“becomes a benchmark in the application of our legal principles.”
Jasper, 764 N.W.2d at 761.
An employee seeking protection under the public-policy exception
in his or her wrongful-discharge claim must prove the following
elements:
(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; (3) the employee engaged in the
protected activity, and this conduct was the reason the
employer discharged the employee; and (4) the employer had
no overriding business justification for the discharge.
Berry, 803 N.W.2d at 109–10. The first two elements constitute
questions of law to be determined by the court. Fitzgerald, 613 N.W.2d
at 282. If the discharged employee successfully establishes each of these
elements, “he or she is entitled to recover both personal injury and
property damage.” Berry, 803 N.W.2d at 110.
C. Prior Application of the Public-Policy Exception. In Iowa,
we have recognized many situations where the public-policy exception
applies. Below is a selection of cases to illustrate how we have previously
implemented the exception.
13
1. Enforcing a statutory right. We have consistently held that an
employee cannot be discharged in retaliation for enforcing a statutory
right. The first case to do so was Springer, 429 N.W.2d 558. There, we
held an employer who terminated an employee for filing a workers’
compensation claim could be liable for wrongful discharge. Id. at 560–
61. We reaffirmed Springer in three subsequent cases. See Clarey v. K-
Products, Inc., 514 N.W.2d 900, 902 (Iowa 1994) (finding sufficient
evidence to support a wrongful-discharge jury verdict in favor of a
plaintiff terminated after filing a workers’ compensation claim); Smith v.
Smithway Motor Xpress, Inc., 464 N.W.2d 682, 685 (Iowa 1990) (holding
even though the discharge did not directly interfere with payment of
benefits, the firing violated public policy, because it would chill the
assertion of workers’ compensation rights and erode the employer’s
obligation to pay valid claims); Niblo v. Parr Mfg., Inc., 445 N.W.2d 351,
353 (Iowa 1989) (deciding there was sufficient evidence to support a
jury’s verdict finding the plaintiff had been terminated for threatening to
file a workers’ compensation claim).
We extended the holding in Springer to persons who filed for
unemployment benefits. Lara v. Thomas, 512 N.W.2d 777, 782 (Iowa
1994). In extending Springer, we reemphasized our language in Smith by
stating, “Employers cannot be permitted to intimidate ‘employees into
foregoing the benefits to which they are entitled in order to keep their
jobs.’ ” Id. (quoting Smith, 464 N.W.2d at 686).
2. Refusal to participate in illegal activity. We have two cases
allowing a wrongful-discharge claim to proceed when an employee
refuses to participate in an illegal activity. The first is Fitzgerald, 613
N.W.2d 275. There, we held an employee had a claim for wrongful
discharge because he intended to testify truthfully in a legal proceeding,
14
rather than perjure himself. Id. at 285–86. In reaching this conclusion,
we cited decisions from other jurisdictions that allowed such claims
when an employee refused to commit perjury. Id. at 286. Although,
Fitzgerald did not testify before his discharge, we said the employee must
only show he had a good faith intent to testify truthfully. Id. at 287.
The second case to hold a person cannot be discharged for failing
to participate in illegal activity is Jasper, 764 N.W.2d 751. In Jasper, an
employee refused to work in an understaffed room at a daycare center, a
situation violating the administrative rules issued by the Iowa
Department of Human Services. Id. at 758–59. The daycare provider
then terminated her employment. Id. at 759. In determining the
appropriate public policy, we looked to the administrative regulations of
this state. Id. at 765. We found the department adopted the rules for
the health, safety, and welfare of children in daycare facilities. Id. at
766. Accordingly, we affirmed the jury verdict because Jasper had
presented sufficient evidence to establish she was terminated because
she refused to violate the administrative regulations. Id. at 768.
3. Whistleblowing. A third category of cases where we have said
discharging an employee violates public policy is whistleblowing. We
issued two cases on the same day in September 1998 to discuss this
issue. The first matter was Tullis v. Merrill, 584 N.W.2d 236 (Iowa 1998).
There, Tullis complained internally to the business owner that the
company was not paying his insurance benefits as part of his promised
wages. Id. at 237–38. Tullis claimed this failure to pay wages violated
chapter 91A of the Iowa Code. Id. at 238. Although Tullis could have
filed a complaint with the labor commissioner under Iowa Code section
91A.10, he chose to make a complaint in-house. After doing so, his
employer terminated him. Id.
15
He brought a wrongful-discharge action against his employer
based on the public-policy exception to the at-will employment doctrine.
Id. The jury returned a verdict in favor of Tullis’s wrongful-discharge
claim. Id. The employer appealed. Id.
On appeal, the employer argued the public-policy exception only
applied if the employee made the complaint to the labor commissioner
under section 91A.10. Id. at 239. The employer claimed the statute only
protected an employee who made a complaint with the commissioner. Id.
The statute provided:
An employer shall not discharge or in any other manner
discriminate against any employee because the employee has
filed a complaint, assigned a claim, or brought an action
under this section or has cooperated in bringing any action
against an employer.
Iowa Code § 91A.10(5) (1995). In response to this claim, we held public
policy prohibited Tullis’s firing for making a wage claim, and the internal
complaint satisfied this public policy. Tullis, 584 N.W.2d at 239–40.
The other case filed that day was Teachout, 584 N.W.2d 296.
There, a teacher’s assistant claimed the school terminated her after she
reported alleged child abuse to her supervising teacher and orally to the
department of human services. Id. at 298–99. In Teachout, the Code did
not expressly protect an employee for making a complaint of child abuse.
However, the Code did provide
[c]hildren in this state are in urgent need of protection
from abuse. It is the purpose and policy of this [statute] to
provide the greatest possible protection to victims or
potential victims of abuse through encouraging the increased
reporting of suspected cases of such abuse, insuring the
thorough and prompt investigation of these reports.
Iowa Code § 232.67. Therefore, we concluded the public policy of Iowa
protects a person discharged by an employer because he or she makes a
16
good faith complaint of child abuse. Teachout, 584 N.W.2d at 300–01.
However, we held Teachout failed to establish a jury question on the
element of causation; she demonstrated only that her “termination
occurred after the District learned she had engaged in a protected
activity,” not that her conduct was a determinative factor. Id. at 302.
Another case dealing with whistleblowing was Ballalatak v. All
Iowa Agriculture Ass’n, 781 N.W.2d 272 (Iowa 2010). In Ballalatak, the
employee claimed he was fired for internally complaining that the
company was not properly handling a fellow employee’s workers’
compensation claim. Id. at 275. In determining whether a claim existed,
we favorably cited an Eighth Circuit Court of Appeals opinion where the
federal court determined we would recognize a public-policy exception to
the employment at-will doctrine when an employee makes an internal
complaint about employee safety. Id. at 277 (citing Kohrt v. MidAmerican
Energy Co., 364 F.3d 894, 902 (8th Cir. 2004)). We found, however, that
the Iowa workers’ compensation statutes did not provide a public-policy
exception for an internal complaint based on a fellow employee’s concern
that the employer may not be complying with Iowa’s workers’
compensation laws. Id. at 278.
D. Application of Legal Principles. With these principles and
jurisprudence in mind, we turn to the case at hand. The jury returned a
verdict for Dorshkind. Thus, the jury resolved the factual issues in the
third and fourth elements by finding Oak Park discharged Dorshkind
because of her whistleblowing and that Oak Park had no overriding
business justification for the discharge. Therefore, we need only address
the first and second elements, which are legal questions—the existence
of a clearly defined and well-recognized public policy that protects
17
Dorshkind’s activity and that Dorshkind’s discharge from employment
would undermine this public policy.
1. Clearly defined and well-recognized public policy. To resolve the
issue before us, we must ask whether a clearly defined and well-
recognized public policy exists to bar Dorshkind’s termination for
internal whistleblowing relating to Oak Park’s forgery of state-mandated
training documents for its dementia program. This is a question of law.
Fitzgerald, 613 N.W.2d at 282.
We look primarily to our statutes to determine whether an implied
or express public policy exists but such policies may also be found in our
constitution. Id. at 283; see also Kohrt, 364 F.3d at 899 (applying Iowa
law). The court does not look only to statutes expressly mandating
protection for at-will employees. Fitzgerald, 613 N.W.2d at 283. “[W]e
[also] look to other statutes which not only define clear public policy but
imply a prohibition against termination from employment to avoid
undermining that policy.” Id. However, we do not divine public policy
from internal company policies or agreements. Ballalatak, 781 N.W.2d at
278. Administrative regulations are another source of public policy
“when adopted pursuant to a delegation of authority in a statute that
seeks to further a public policy.” Jasper, 764 N.W.2d at 764. Courts in
other jurisdictions also recognize professional rules as sources of public
policy. See, e.g., Rocky Mountain Hosp. & Med. Serv. v. Mariani, 916 P.2d
519, 523 (Colo. 1996) (holding state-accountancy-board rules may
constitute articulations of public policy in case where a CPA was
terminated in retaliation for complaining to supervisors about
questionable accounting practices).
We cautiously identify policies to support an action for wrongful
discharge under the public-policy exception. We do so because
18
[a]ny effort to evaluate the public policy exception with
generalized concepts of fairness and justice will result in an
elimination of the at-will doctrine itself. Moreover, it could
unwittingly transform the public policy exception into a
“good faith and fair dealing” exception, a standard we have
repeatedly rejected.
Fitzgerald, 613 N.W.2d at 283 (citations omitted); accord Lloyd v. Drake
Univ., 686 N.W.2d 225, 230–31 (Iowa 2004) (rejecting a wrongful-
discharge claim lodged by a security guard who was fired after forcibly
restraining a student suspected of assault because the asserted public
policy against crime is generalized, not “clearly defined”). Thus, the
exception is narrowly circumscribed to only those policies clearly defined
and well-recognized to protect those with a compelling need for
protection from wrongful discharge. See, e.g., Harvey v. Care Initiatives,
Inc., 634 N.W.2d 681, 685 (Iowa 2001) (rejecting an independent
contractor’s claim for wrongful discharge by finding “no compelling need,
as we did for at-will employees, to support a wrongful termination tort”).
The “well recognized and clearly defined” requirement ensures
“employers have notice that their dismissal decisions will give rise to
liability.” Fitzgerald, 613 N.W.2d at 282–83.
We have previously held that an employer cannot discharge an
employee because he or she whistleblows if there is a public policy to
protect the integrity and employment of those who uphold the law by
reporting illegalities in the workplace. Teachout, 584 N.W.2d at 300–01.
In other words, whistleblowing is an exception to the at-will employment
doctrine if the public policy of this state requires protection of the public
by ensuring “infractions of rules, regulations, or the law pertaining to
public health, safety, and the general welfare” are properly reported.
Palmer v. Brown, 752 P.2d 685, 689 (Kan. 1988) (applying this principle
under Kansas law).
19
We find the Code and our administrative rules support a clearly
defined and well-recognized public policy under the exception to the at-
will employment doctrine. Chapter 231C, governing assisted living
facilities, expressly states the legislature’s findings, purpose, and intent
in enacting chapter 231C as follows:
1. The general assembly finds that assisted living is
an important part of the long-term care continua in this state.
Assisted living emphasizes the independence and dignity of
the individual while providing services in a cost-effective
manner.
2. The purposes of establishing an assisted living
program include all of the following:
a. To encourage the establishment and maintenance of
a safe and homelike environment for individuals of all income
levels who require assistance to live independently but who
do not require health-related care on a continuous twenty-
four-hour per day basis.
b. To establish standards for assisted living programs
that allow flexibility in design which promotes a social model
of service delivery by focusing on independence, individual
needs and desires, and consumer-driven quality of service.
c. To encourage public participation in the development
of assisted living programs for individuals of all income
levels.
3. It is the intent of the general assembly that the
department of elder affairs establish policy for assisted living
programs and that the department of inspections and
appeals enforce this chapter.3
Iowa Code § 231C.1 (2007) (emphasis added).
3To ensure the fulfillment of this intent, the legislature provided a procedure for
lodging complaints concerning the operation of an assisted living facility. See Iowa
Code § 231C.7(1) (“Any person with concerns regarding the operations or service
delivery of an assisted living program may file a complaint with the department of
inspections and appeals.”). Moreover, the legislature prohibited retaliation by the
assisted living program against an employee “who has initiated or participated in any
proceeding authorized by this chapter.” Id. § 231C.13.
20
The legislature, by including a findings, purpose, and intent
provision in chapter 231C, demonstrated a clearly defined and well-
recognized public policy to make assisted living available throughout the
state and to ensure the safety of persons residing in assisted living
facilities. Other provisions of chapter 231C supporting this public policy
include rulemaking authority by the elder affairs department for
certification of assisted living facilities and requiring compliance with fire
and safety standards. Id. §§ 231C.3, .4.
Turning to the administrative rules, we find the legislature clearly
authorized the elder affairs department to promulgate rules regarding the
certification of assisted living facilities “to ensure, to the greatest extent
possible, the health, safety, and well-being and appropriate treatment of
tenants.” Id. § 231C.3(1)(a). Specifically, “[t]he department may also
establish by rule in accordance with chapter 17A minimum standards for
. . . dementia-specific assisted living programs.” Id. § 231C.3(6).
At the time of Dorshkind’s report and discharge, the administrative
rules stated:
25.34(1) All personnel employed by or contracting
with a dementia-specific program shall receive a minimum of
six hours of dementia-specific education and training prior
to or within 90 days of employment or the beginning date of
the contract.
25.34(2) The dementia-specific education or training
shall include, at a minimum, the following:
a. An explanation of Alzheimer’s disease and related
disorders;
b. The program’s specialized dementia care
philosophy and program;
c. Skills for communicating with persons with
dementia;
21
d. Skill for communicating with family and friends of
persons with dementia;
e. An explanation of family issues such as role
reversal, grief and loss, guilt, relinquishing the care-giving
role, and family dynamics;
f. The importance of planned and spontaneous
activities;
g. Skills in providing assistance with instrumental
activities of daily living;
h. The importance of the service plan and social
history information;
i. Skills in working with challenging tenants;
j. Techniques for simplifying, cueing, and redirecting;
and
k. Staff support and stress reduction.
25.34(3) All personnel employed by or contracting
with a dementia-specific program shall receive a minimum of
two hours of dementia-specific continuing education
annually.
25.34(4) An employee who provides documentation of
completion of a dementia-specific education or training
program within the past 12 months shall be exempt from the
education and training requirement of subrule 25.34(1).
Iowa Admin. Code r. 321—25.34(1)–(4).
Thus, the administrative rules specifically articulated a concern for
the health, safety, and welfare of dementia patients in assisted living
facilities. Acting on this concern, the elder affairs department required
the implementation of a training program with accompanying state-
mandated training documents to safeguard dementia patients’ health,
safety, and welfare.
In Teachout, we found language in a statute similar to the language
in chapter 231C and the administrative rules promulgated under chapter
22
231C supported a public policy that made the reporting of child abuse a
protected activity. 584 N.W.2d at 300–01; see also Trombetta v. Detroit,
Toledo & Ironton R.R., 265 N.W.2d 385–88 (Mich. Ct. App. 1978) (stating,
in dicta, that it would have been impermissible for the employee to be
discharged for refusing to falsify pollution control reports that are
required to be filed with the state). As in Teachout, based on the plain
language found in the statutes and rules, we find a strong public policy
to ensure the proper care of dementia patients.
We should not allow an employer to ignore the substance either of
a statute or administrative regulation or the statement of public policy
that it represents. “There is no public policy more important or more
fundamental than the one favoring the effective protection of the lives
and property of citizens.” Palmateer v. Int’l Harvester Co., 421 N.E.2d
876, 879 (Ill. 1981). Accordingly, we find Dorshkind’s whistleblowing,
which involved reporting violations of law that jeopardized the health,
safety, and welfare of dementia patients in an assisted living facility, is
supported by a clearly defined and well-recognized public policy. Thus,
we conclude Dorshkind’s claim satisfies the first element of the public-
policy exception.
2. Discharge undermines public policy. Under the second element,
we must determine whether Dorshkind’s discharge from employment
undermines this public policy. Again, this is a question of law.
Fitzgerald, 613 N.W.2d at 282. We consider the impact of the discharge
on both the dismissed employee and other employees. Id. at 288. “An
essential element of proof to establish the discharge undermines or
jeopardizes the public policy necessarily involves a showing the
dismissed employee engaged in conduct covered by the public policy.”
Id. at 287. If it can be shown the whistleblower engaged in conduct in
23
furtherance of public policy and was dismissed for doing so, and that
discharge will discourage other employees from engaging in the same
conduct, then public policy is undermined. Id. at 288.
Considering such factors, we conclude Dorshkind’s discharge did
undermine the public policy at stake. Dorshkind’s conduct involved
internally reporting what she believed were two coworkers forging state-
mandated training documents pertaining to the care of dementia
patients. Such an act advances a clear public policy. Moreover, the
impact of the dismissal affected Dorshkind by punishing her for
reporting conduct jeopardizing the health, safety, and welfare of
dementia patients.
We next examine the impact of the discharge on other employees.
Dorshkind’s dismissal chills reporting by other employees for similar
workplace illegalities. Cf. Smith, 464 N.W.2d at 685 (holding the
discharge for asserting a workers’ compensation claim violated public
policy, even though there was no direct interference with the payment of
benefits, because it would chill the claiming of workers’ compensation
rights and erode the employer’s obligation to pay valid claims). As the
Eighth Circuit accurately observed when applying Iowa law,
If employers were permitted to discharge employees for such
conduct, then employees would be hesitant to articulate
safety concerns because to do so would potentially put their
jobs at risk. Clearly, a public policy that encourages
employees “to institute [a] new and [to] perfect existing safety
programs” is undermined when an employee can be
discharged for doing exactly what the policy encourages.
Kohrt, 364 F.3d at 902 (quoting Iowa Code § 88.1(1) (2003)). Thus,
allowing employers to fire employees for whistleblowing effectively hangs
a sword of Damocles over the heads of concerned employees like
24
Dorshkind, forcing them to choose between protecting others and
sacrificing their employment.
An additional consideration is that Dorshkind made her complaint
internally. We believe such a claim for internal whistleblowing stands for
a number of reasons.4 First, we have previously held internal reporting
4Other jurisdictions have similarly identified internal whistleblowing as a
protected activity for purposes of establishing wrongful-discharge claims. See, e.g.,
Kearl v. Portage Envtl., Inc., 205 P.3d 496, 500 (Colo. App. 2008) (holding “Colorado has
a clearly expressed public policy against terminating an employee in retaliation for the
employee’s good faith attempt to prevent the employer’s participation in defrauding the
government” in case involving an employee who was fired for reporting concerns to his
superiors about a plan to provide remediation services at a uranium enrichment plant);
Lanning v. Morris Mobile Meals, Inc., 720 N.E.2d 1128, 1130–31 (Ill. App. Ct. 1999)
(holding a food service worker, who was fired for reporting the employer’s unsafe food
preparation practices in violation of the law, had a valid complaint of retaliatory
discharge where she made an internal complaint, not a report to a public official); Moyer
v. Allen Freight Lines, Inc., 885 P.2d 391, 395 (Kan. Ct. App. 1994) (affirming the denial
of a motion for directed verdict in favor of the employee who reported equipment failures
to the company’s management and was subsequently fired, based on protection
afforded to employees reporting “to either company management or law enforcement
officials” (emphasis removed)); Barker v. State Ins. Fund, 40 P.3d 463, 468 (Okla. 2001)
(“Oklahoma law protects both internal and external reporting of whistle-blowers who
establish a sufficient public policy violations from retaliatory discharge.”).
Only the minority of courts refuse to protect an employee who makes an internal
report. See Wholey v. Sears Roebuck, 803 A.2d 482, 496 (Md. 2002) (“To qualify for the
public policy exception to at-will employment, the employee must report the suspected
criminal activity to the appropriate law enforcement or judicial official, not merely
investigate suspected wrong-doing and discuss that investigation with co-employees or
supervisors.”).
Some jurisdictions give less credence to the difference between internal and
external reports, focusing instead on the nature of the claim. See, e.g., Green v. Ralee
Eng’g Co., 78 Cal. Rptr. 2d 16 (Cal.1998) (rejecting termination following the employee’s
internal reports concerning the employer’s alleged failure to comply with inspection
practices mandated by regulations implementing the Federal Aviation Act); Thomas v.
Med. Ctr. Physicians, P.A., 61 P.3d 557, 565–66 (Idaho 2002) (reversing summary
judgment for the employer, where the employee was fired for reporting misconduct to
the supervisor); Connelly v. State, 26 P.3d 1246 (Kan. 2001) (finding state troopers who
internally rejected and protested illegal activity in not enforcing laws designed for the
public safety are protected from retaliatory discharge).
Other states have whistleblower statutes that provide discharged employees with
a cause of action, regardless of whether the report was made internally or externally.
See, e.g., N.D. Cent. Code § 34-01-20(3) (West, current through the 2011 Reg. and Spec.
Sess. of the 62nd Legis. Assemb.) (preventing the termination of an employee who “in
good faith, reports a violation or suspected violation of federal, state, or local law,
25
is actionable, even where an applicable statute describes a method for
lodging the whistleblower’s complaint externally. Tullis, 584 N.W.2d at
239–40 (finding the employee had a valid wrongful discharge claim after
complaining internally to his boss about unpaid wages and not utilizing
the labor commissioner to determine the wages, as provided in Iowa Code
section 91A.10). Second, whether the employee makes the complaint
internally or externally does not change the public-policy considerations
of our state. Third, discharging an employee for making an internal
complaint still undermines the public policy. Fourth, the requirement of
causation assures us the internal report was made to further the public
policy of this state, rather than for other reasons.
Finally, it makes more sense that an employee would first discover
the problem and report it internally before lodging a complaint
externally.5 Moreover, this allows the employer to correct the deficiency
_____________________
ordinance, regulation, or rule to an employer, a governmental body, or a law enforcement
official” (emphasis added)).
Among the courts protecting internal whistleblowers, some have specifically
addressed the advancement of public policy found in the common law, not statutes,
when the employee’s report serves to protect the public’s health, safety, and welfare.
White v. Gen. Motors Corp., 908 F.2d 669, 671 (10th Cir. 1990) (granting protection to
employees who were fired after complaining to management of defects in the installation
of brakes in automobiles); Watassek v. Mich. Dep’t of Mental Health, 372 N.W.2d 617,
621 (Mich. Ct. App. 1985) (upholding wrongful-discharge claim where the employee
internally reported the abuse of patients at a mental-health facility), disapproved of on
other grounds by Phillips v. Butterball Farms Co., 531 N.W.2d 144, 146 n.15 (Mich.
1995). Other courts have protected employees who have made internal reports to
promote workplace safety. See, e.g., Pytlinski v. Brocar Prods., Inc., 760 N.E.2d 385,
388 (Ohio 2002) (protecting an employee who was terminated in contravention of public
policy for complaining to the company’s president about several violations of law,
including OSHA regulations).
5Adhering to this logic, several other jurisdictions actually require the employee
to internally report before making an external report, to afford the employer the
opportunity to cure the problem. See, e.g., Wagner v. City of Holyoke, 404 F.3d 504,
509 (1st Cir. 2005) (holding that under Massachusetts law, the employee could not
bring a claim where he failed to provide written notification to his supervisor before
externally reporting misconduct); Dirrane v. Brookline Police Dep’t, 315 F.3d 65, 72–73
(1st Cir. 2002) (same); Garrity v. Univ. at Albany, 755 N.Y.S.2d 471, 473 (App. Div.
26
in a reasonably prompt manner. When the government becomes
involved, the employer may take the position that the conduct does not
violate a statute or rule to avoid sanctions. Then, the only resolution is a
legal battle. By first bringing the problem to the attention of the
employer without outside intervention, the matter can be handled
quickly and in a less costly manner. However, if the employer does not
correct a perceived problem, then the authorities can intervene to
determine the extent of the problem and its amelioration.
Accordingly, we find Dorshkind’s internal report of Oak Park’s
violations of law and regulations relating to the forgery of state-mandated
documents for the dementia program is a protected activity as a matter
of law. Preventing the retaliatory termination of internal whistleblowers
not only shields the employee from tortious conduct, but also protects
the public by ensuring “infractions of rules, regulations, or the law
pertaining to public health, safety, and the general welfare” are properly
reported. Palmer, 752 P.2d at 689.
V. Punitive Damages.
Regarding the second issue, the crux of Oak Park’s argument is
that we have not previously recognized a claim for wrongful discharge
arising from an employee reporting a violation of the administrative rules
in question. For authority, Oak Park cites Jasper, where we said,
Although the tort of wrongful discharge in violation of
public policy has been recognized in Iowa for over twenty
years, this case is the first time we have specifically
recognized a cause of action for wrongful discharge arising
from the refusal of the employee to violate administrative
rules. Additionally, there has otherwise been no declaration
that the subject matter of the administrative rules in dispute
_____________________
2003) (rejecting a claim under the New York whistleblower statute where the employee
did not give supervisors reasonable time to investigate and correct problems).
27
in this case were of the type that would support a tort of
wrongful discharge.
764 N.W.2d at 774. In Jasper the public policy involved was derived
solely from an administrative rule. Id.
Here, we derived the public policy from chapter 231C. We used the
administrative rules to show the agency recognized the public policy and
passed rules to protect the patients in assisted living facilities. In
fairness, however, the training requirements were contained in an
administrative rule. See Iowa Admin. Code r. 321—25.34(1)–(4). Thus,
the reported violation is inextricably intertwined with the public policy
supporting the exception to the at-will employment doctrine. Moreover,
the misconduct reported by Dorshkind preceded our holding in Jasper.
Accordingly, as in Jasper, an employer cannot willfully and wantonly
disregard the rights of an employee based upon a violation of an
administrative rule when at the time of the discharge, we did not
recognize administrative rules as a source of public policy. 764 N.W.2d
at 774.
Therefore, the district court erred in submitting Dorshkind’s
punitive damages claim to the jury.
VI. Conclusion and Disposition.
We conclude that an employer’s retaliatory discharge of an at-will
employee, who internally reported her employer’s forgery of state-
mandated training documents for a dementia program in an assisted
living facility, in contravention of state statutes and administrative
regulations, violated public policy. Therefore, we affirm that part of the
court of appeals decision and the district court judgment regarding
actual damages. We also affirm the court of appeals decision, finding the
district court should not have submitted the punitive damages claim to
28
the jury because at the time of Dorshkind’s discharge, we did not
recognize a public-policy exception to the at-will employment doctrine
based upon a violation of administrative rules. Thus, on the punitive
damages issue, we reverse the district court judgment and conclude
Dorshkind is not entitled to punitive damages. We remand the case to
the district court to enter judgment consistent with our decision.
DECISION OF COURT OF APPEALS AFFIRMED; DISTRICT
COURT JUDGMENT AFFIRMED IN PART AND VACATED IN PART,
AND REMANDED WITH DIRECTIONS.
All justices concur except Cady, C.J., who specially concurs, and
Mansfield, Waterman, and Zager, JJ., who concur in part and dissent in
part.
29
#11–2100, Dorshkind v. Oak Park Place of Dubuque II, L.L.C.
CADY, Chief Justice (concurring specially).
I concur in the majority opinion, but write separately to explain two
important points.
First, the protected conduct of internal whistleblowing only relates
to a complaint by an employee of a violation by a coemployee or
supervisor of a statute or regulation. The tort does not protect employees
who lodge internal complaints over legitimate business practices by
employers.
Second, our law protects whistleblowing that is either expressly
protected by statute or impliedly protected by public policy. Our statute
obviously only expressly protects external whistleblowing. But, our
public policy impliedly protects internal whistleblowing because it is a
clear public policy of this state to provide the elderly in Iowa who reside
in assisted living homes a safe and dignified environment. This clear
public policy is important enough that it implies protection for internal
whistleblowing. Employers who choose to operate assisted living centers,
as full partners in this public policy, must be expected to embrace
internal complaints of regulatory or statutory violations by the business
if the public policy is truly to be met. The public policy can be served by
internal whistleblowing just as much, if not more, as by external
whistleblowing.
Our law must assume employers want to comply with the statutory
and regulatory scheme and want to know when their employees are
failing to do so. Accordingly, the public policy of this state promotes and
protects internal whistleblowing.
30
#11–2100, Dorshkind v. Oak Park Place of Dubuque II, L.L.C.
MANSFIELD, Justice (concurring in part and dissenting in part).
I. Introduction.
The majority opinion significantly and, in my view, ill-advisedly
broadens the scope of Iowa’s tort of wrongful discharge in violation of
public policy. Under the majority opinion, any time a worker tells a
coworker about an alleged violation of law related to health, safety, or
welfare, the employer is at risk of litigation if the employer subsequently
terminates that worker’s employment. This decision is contrary to our
precedents, which deferred to the other branches of government in
defining the scope of the tort. Thus, our prior decisions required an
express or implicit legislative or administrative determination to protect
internal reporting. The present expansion of the law eliminates that
requirement and thereby erodes Iowa’s long-standing doctrine of
employment at will. For the reasons set forth herein, I would hold the
plaintiff did not engage in protected activity under Iowa law, and
therefore the defendant’s motion for directed verdict on liability should
have been granted.6
Until today, our law was clear:
To prevail on an intentional tort claim of wrongful
discharge from employment in violation of public policy, an
at-will employee must establish the following elements:
(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; (3) the employee engaged in the
protected activity, and this conduct was the reason the
6I concur in the result reached by the majority to the extent it affirms the court
of appeals decision to set aside the punitive damage verdict. See Jasper v. H. Nizam,
Inc., 764 N.W.2d 751, 773–74 (Iowa 2009) (“We have refused to permit punitive
damages in an action for retaliatory discharge when the grounds for the discharge have
been recognized for the first time in the instant case to be in violation of public policy.”);
see also Lara v. Thomas, 512 N.W.2d 777, 782 (Iowa 1994).
31
employer discharged the employee; and (4) the employer had
no overriding business justification for the discharge.
Berry v. Liberty Holdings, Inc., 803 N.W.2d 106, 109–10 (Iowa 2011). We
had reiterated that standard many times. See Ballalatak v. All Iowa
Agric. Ass’n, 781 N.W.2d 272, 275 (Iowa 2010); Jasper v. H. Nizam, Inc.,
764 N.W.2d 751, 761 (Iowa 2009); George v. D.W. Zinser Co., 762 N.W.2d
865, 871 (Iowa 2009); Lloyd v. Drake Univ., 686 N.W.2d 225, 228 (Iowa
2004); Davis v. Horton, 661 N.W.2d 533, 535 (Iowa 2003); Fitzgerald v.
Salsbury Chem., Inc., 613 N.W.2d 275, 282 n.2 (Iowa 2000).
This test was not difficult to apply, which was one of its virtues.
The tort required both “the existence of a clearly defined and well-
recognized public policy that protects employee’s activity” and that “the
employee engaged in the protected activity.” Berry, 803 N.W.2d at 109–
10; accord Ballalatak, 781 N.W.2d at 275; Jasper, 764 N.W.2d at 761;
George, 762 N.W.2d at 871; Lloyd, 686 N.W.2d at 228; Davis, 661
N.W.2d at 535; Fitzgerald, 613 N.W.2d at 282 n.2. In other words, the
employee had to have engaged in the activity that the statute or
regulation protected. In the whistleblowing context, this meant the
employee’s activity (i.e., reporting) had to be the subject of a clearly
defined and well-recognized public policy, not merely that the employee
reported on something that was the subject of such a policy. The clearly
defined and well-recognized policy had to cover reporting itself.
Consistent with that law, we had allowed internal whistleblowing
claims to go forward where an applicable statute or regulation expressly
recognized internal reporting. See Tullis v. Merrill, 584 N.W.2d 236, 239–
40 (Iowa 1998) (finding that an internal complaint about the withholding
of wages was protected activity because the statute and regulations
provided that “ ‘an employee would be protected against discharge or
32
discrimination caused by the complaint to the employer’ ” (quoting Iowa
Admin. Code r. 347—36.6(2))). And we had disallowed such claims
where the plaintiff could not point to any statute or regulation that
covered internal reporting. See Ballalatak, 781 N.W.2d at 278 (finding
no protection for “internal complaints based on a concern that the
employer may not be complying with workers’ compensation laws”).
The majority now sweeps away that previously clear legal standard
and replaces it with a series of platitudes about health, safety, and
welfare. Thus, the majority eliminates any distinction between external
reporting and internal reporting with the broad-brush statement,
“[W]hether the employee makes the complaint internally or externally
does not change the public policy considerations of our state.” The
majority also says, “We should not allow an employer to ignore the
substance either of a statute or administrative regulation or the
statement of public policy that it represents.” Quoting an out-of-state
case, the majority adds, “ ‘There is no public policy more important or
more fundamental than the one favoring the effective protection of the
lives and property of citizens.’ ” Palmateer v. Int’l Harvester Co., 421
N.E.2d 876, 879 (Ill. 1981).
These are noble sentiments, but the upshot is: Whenever an
employee speaks to a coemployee about a violation of some law or
regulation that relates to health, safety, or welfare, the employer puts
itself in legal jeopardy if it later discharges that employee. I recognize the
employee still must prove the complaint was the reason for the
discharge, but questions of causation are often disputed and difficult to
prove or disprove. Thus, a business may be reluctant to replace one
employee with another person, whom it believes will do a better job, out
of fear of litigation. This will be a new cost of doing business in Iowa.
33
We have been willing to accept that cost, and ought to continue to
accept that cost, when the employee engaged in clearly defined and well-
recognized protected activity. But there are myriad laws and regulations
relating to “health, safety, and welfare.” There are also many types of
violations, ranging from the serious to the trivial. This case falls
somewhere in the middle. The nursing home’s employees acted
deceitfully in falsifying training records, but there is no indication that
the care received by any resident was affected. Also, employees
participate in workplace discussions all the time. If we make the tort
available whenever employee brings an alleged health, safety, or welfare
violation to the attention of a coemployee, we have truly changed the
nature of that tort in Iowa.
Previously, we said on many occasions that the public-policy
exception in Iowa is a “narrow” exception to employment at will. See,
e.g., Berry, 803 N.W.2d at 109; Ballalatak, 781 N.W.2d at 275; Jasper,
764 N.W.2d at 762; Phipps v. IASD Health Servs. Corp., 558 N.W.2d 198,
202 (Iowa 1997); Lara v. Thomas, 512 N.W.2d 777, 781–82 (Iowa 1994).
This is consistent with the basic policy in Iowa that employers who do
not engage in discrimination and have not entered into collective
bargaining or other express or implied contractual relationships with
their employees should generally be free to hire and fire employees
without fear of having those decisions second-guessed in court. The
majority opinion, I respectfully submit, is inconsistent with this
characterization.
II. The Plaintiff Only Engaged in Internal Reporting, Not
External Reporting.
Oak Park Place is an unsympathetic defendant, and Karen
Dorshkind is a sympathetic plaintiff. Still, I would like to highlight some
34
points in the trial record.7 Dorshkind never went to the Department of
Inspections and Appeals (DIA) with her concerns, and the trial record
indicates she didn’t want the state involved at all. Her “first concern was
always the residents,” but she was also concerned “for the company . . .
what would happen.”
On July 24, 2008, during a site visit by the DIA, two employees of
Oak Park, Tim Hendricks and Kristi Niemer, were apparently engaged in
falsifying training records. They had the office door open and did not
make any effort to conceal their actions from fellow employees.
Dorshkind was one of several employees who observed this activity.
Dorshkind mentioned immediately what she saw to two other employees.
Approximately six weeks later, Dorshkind telephoned her former
supervisor, Marthe Jones, and brought up the incident. As Jones
recalled, Dorshkind “was worried that the State would find out and that
there would be repercussions for Oak Park, and she said she did not
know what to do.” Dorshkind was “afraid” that Oak Park was “going to
lose [its] license.” Dorshkind also told Jones that it appeared Hendricks
and Niemer were having an affair. This was a “feeling” based on her
observations and things she had heard. Jones agreed to contact the
company’s human resources director, and Dorshkind went along with
that plan. Dorshkind never contacted the DIA, nor did anyone relay her
observations to the DIA.
The next day, September 4, 2008, the human resources director
and another manager, also based in Madison, went to Dubuque to
investigate the matter. After two days of interviewing and reviewing
7Like the majority, I present the facts in the light most favorable to Dorshkind,
since she prevailed at trial.
35
documents, they handed a termination letter to Dorshkind that alleged
she had “not been truthful” in several respects, including the
relationship between the two employees, the falsification of training
records, and a matter related to Dorshkind’s own job duties.
Meanwhile, another witness to the July 24 events, Oak Park’s
director of nursing Denise Schiltz, was so upset at what she saw that she
turned in a thirty-day notice of resignation that day. When her term of
employment officially ended, Schiltz contacted the DIA and filed an
anonymous complaint of what she had seen.8 This caused the DIA to
launch another inspection. Following a site visit in late September 2008
brought on by Schiltz’s anonymous complaint, the DIA ultimately
concluded that training documents had indeed been falsified. The DIA
fined Oak Park $10,000 and issued a conditional certificate that
temporarily prohibited Oak Park from admitting new residents.
III. Under Our Whistleblowing Precedents, the Employee Must
Have Engaged in Protected Activity as Measured by a Statute or
Regulation.
Let me now turn to our whistleblowing precedents. The first
reporting or “whistleblowing” case we decided was Tullis. See 584
N.W.2d 236. There we held an employee who had been terminated for
seeking reimbursement of amounts wrongfully withheld from his
paycheck had a cause of action for wrongful discharge. See id. at 240.
We found an explicit statutory underpinning for the employee’s claim.
Iowa law provides, “ ‘An employer shall not discharge or in any other
manner discriminate against any employee because the employee has
8Although Schiltz acknowledged she could have filed an anonymous complaint
with the DIA while she was still working for Oak Park, she waited until she was out of
the facility. She did not believe anyone was in immediate jeopardy.
36
filed a complaint . . . .’ ” Id. at 239 (quoting Iowa Code § 91A.10(5)
(1995)). We specifically found that the employee’s internal letter to his
employer amounted to a “complaint” under the statute. Id. at 239–40
(noting that regulations adopted under the statute provided that “ ‘[a]
complaint to the employer made in good faith would be related to the Act,
and an employee would be protected against discharge or discrimination
caused by the complaint to the employer’ ” (quoting Iowa Admin. Code r.
347—36.6(2))). Accordingly, the employee’s firing violated a clear and
express public policy. Id.
The key point in Tullis was that the employee’s internal demand to
his employer for unpaid wages amounted to a protected complaint under
the statute. “We are convinced, as was the district court, that Tullis’s
formal letter to Merrill constituted a complaint related to unpaid wages
for purposes of applying section 91A.10(5).” Id. at 240. Tullis was thus
an internal reporting case where the statute protected internal reporting.
The same day we decided Tullis, we also decided Teachout v. Forest
City Community School District, 584 N.W.2d 296 (Iowa 1998). Teachout
should be viewed as an external reporting case where the law protected
external reporting. In Teachout, a teacher’s assistant was terminated
after reporting alleged child abuse both within her school and orally to
the Department of Human Services (DHS), although the school was
unaware she had already contacted DHS at the time of her termination.
Id. at 298–99. We emphasized that Iowa law mandated reporting of
suspected child abuse to DHS and provided immunity from civil or
criminal liability for individuals making such reports. Id. at 300 (quoting
Iowa Code §§ 232.73, .75 (1995)). We stated:
Although [the relevant statute] does not specifically mandate
protection for an employee who in good faith makes a report
of suspected child abuse, we think the forceful language of
37
the statute articulates a well-recognized and defined public
policy of Iowa from which such protection can be implied.
Id. at 300–01. Having found a “well-recognized and defined public
policy,” we then concluded the school’s knowledge that Teachout
intended to report child abuse to the authorities could support a
wrongful-discharge claim. Id. at 301. As we explained:
It would be contrary to the public policy articulated in our
child abuse laws to allow an employer to take adverse
employment action on the basis of an employee’s intent to
report child abuse. That is because the employer’s action
would have the effect of discouraging the reporting of
suspected abuse in direct opposition to the public policy of
encouraging the reporting of child abuse. Consequently, if
Teachout had a subjective good-faith belief that child abuse
had occurred, she is protected from any retaliatory action by
her employer causally related to her intent or threat to report
the abuse.
Id. at 301.
However, we concluded that Teachout failed to establish a jury
question on the element of causation. She had demonstrated only that
her “termination occurred after the District learned she had engaged in a
protected activity,” not that her conduct was a determinative factor. Id.
at 302.
Teachout does not support the proposition that mere internal
reporting of child abuse would be a protected activity. To the contrary,
even though there was no dispute the plaintiff had relayed her concerns
internally, we implicitly acknowledged this would not amount to
protected activity. We said that we “must” consider whether Teachout’s
intent to report child abuse to DHS “could constitute protected activity so
as to support a claim of retaliatory discharge.” Id. at 301. But of course,
if Teachout had already engaged in protected activity when she told her
principal about the child abuse, it would have been unnecessary for us
38
to consider whether her intent to tell the authorities constituted
protected activity.
In Harvey v. Care Initiatives, Inc., we rejected a wrongful-
termination whistleblowing claim brought by an independent contractor
against a nursing home. 634 N.W.2d 681, 685–86 (Iowa 2001). The
contractor there had “produced documents suggesting she was
terminated for allegedly filing a complaint about the nursing home with
the state’s Department of Inspection and Appeals.” Id. at 682. We
observed that the relevant statutes allowed anyone to file a complaint,
which would be kept confidential, but only protected employees and
residents from retaliation or discrimination. Id. at 685–86. As we put it,
Our legislature has made it clear through section 135C.46
that the prohibition against retaliatory discharge only applies
to residents and employees of the health care facility. If our
legislature wished to extend the prohibition to all persons, it
would have used the term “persons.”
Id. at 686. We also commented more generally that “[w]e find no
compelling need, as we did for at-will employees, to support a wrongful-
termination tort for independent contractors.” Id. at 684.
George, another whistleblowing case, involved a statute that
protected external reports and an employee who lost his job for making
such an external report. See 762 N.W.2d at 871–72. The employee there
alleged he had been terminated for complaining to the division of labor
services about his employer’s failure to take certain safety precautions
during lead abatement jobs. Id. at 866–67. We found the employee had
engaged in protected activity and had a common law cause of action
because Iowa Code section 88.9(3) states “ ‘[a] person shall not discharge
. . . an employee because the employee has filed a complaint . . . under
. . . this chapter.’ ” Id. at 871–72 (quoting Iowa Code § 88.9(3) (2007)).
39
In 2004, the United States Court of Appeals for the Eighth Circuit,
applying Iowa law, held that an electrical utility employee who had been
fired for openly disputing the safety of certain work procedures could
pursue a public-policy wrongful-discharge claim against his employer.
Kohrt v. MidAmerican Energy Co., 364 F.3d 894, 902 (8th Cir. 2004). The
court noted that the Iowa Occupational Safety and Health Act has a
stated policy of “ ‘[e]ncouraging employers and employees in their efforts
to reduce the number of occupational safety and health hazards at their
places of employment, and to . . . institute new and perfect existing
programs for providing safe and healthful working conditions.’ ” Id. at
899 (quoting Iowa Code § 88.1 (2003)). It further emphasized that Iowa
law makes it unlawful for an employer to “ ‘discharge or in any manner
discriminate against an employee because the employee has filed a
complaint . . . .’ ” Id. at 899 (quoting Iowa Code § 88.9(3)).
Thus, although the Eighth Circuit found the issue “not free from
doubt,” it concluded that “the public policy expressed in IOSHA would be
undermined if [the utility] were permitted to discharge an employee for
voicing safety concerns.” Id. at 902. In a footnote, the court pointed out
that the plaintiff had made a “protected complaint” because the
regulations clarified that the definition of complaint includes “internal,
good faith complaints made by an employee directly to an employer.” Id.
at 902 n.4. Kohrt was thus an internal whistleblowing case where the
law expressly protected internal reporting.
By contrast, in Ballalatak, we refused to find a cause of action
where no statute covered the internal reporting in question. That case
involved an employee who was fired after “relaying concerns” that his
employer was not fulfilling its workers’ compensation obligations to two
fellow employees. Ballalatak, 781 N.W.2d at 278. We seemingly
40
approved the Eighth Circuit’s Kohrt decision, and commented that “Kohrt
and Jasper suggest internal whistle-blowing may be protected in certain
circumstances.” Id. at 277. However, we found that Iowa’s workers’
compensation statutes do not “provide support for internal complaints
based on a concern that the employer may not be complying with
workers’ compensation laws.” Id. at 278. As this court put it, “The
public policy found in Iowa’s workers’ compensation statutes strongly
protects injured employees, but does not extend to coworkers or
supervisors who express concerns regarding whether the injured
employees will be properly compensated.” Id.
Just two years ago, we decided Berry, our most recent (until now)
public-policy, wrongful-discharge case. This was not a whistleblowing
case; rather, the case involved an injured employee who had been fired
for bringing a personal injury lawsuit against an affiliate of his employer.
See Berry, 803 N.W.2d at 108–09. We found that “chapter 668, Iowa’s
comparative fault statute, does not contain a clearly defined and well-
recognized public policy of this state that would limit an employer’s
discretion to discharge an at-will employee.” Id. at 112. We emphasized
that we look at statutes, our constitution, and administrative regulations
as the sources of public policy. Id. at 110. A relevant statute must
either “expressly protect[] a specific employment activity from retaliation
by the employer” or “clearly imply . . . the specific employment activity in
question [is protected] from employer retaliation.” Id. at 111.
Berry’s emphasis on the term of the statute to define the scope of
the tort was not new. In the absence of statutory authority, we had
disallowed wrongful-discharge claims brought by employees who
complained about wrongs against fellow workers. See, e.g., Ballalatak,
781 N.W.2d at 278. Likewise, we had denied an independent
41
contractor’s wrongful-termination claim where the statute specifically
protected only employees. See Harvey, 634 N.W.2d at 686. “The use of
statutes maintains the narrow public-policy exception and ‘provide[s] the
essential notice to employers and employees of conduct that . . . can lead
to tort liability.’ ” Ballalatak, 781 N.W.2d at 277 (quoting Jasper, 764
N.W.2d at 763).
Under our precedent until now, an employee who internally
reported an observation of illegal workplace conduct, in the absence of
some statute or regulation recognizing or protecting such reporting, had
not engaged in protected activity for purposes of the wrongful-discharge
tort. If mere internal reporting of illegality were sufficient, then
Ballalatak should have had a wrongful-discharge claim. See id. at 278
(finding no protection for “internal complaints based on a concern that
the employer may not be complying with workers’ compensation laws”).
In Ballalatak, we reiterated that “Iowa’s workers’ compensation statutes
provide a clear public-policy expression that employers are required to
compensate employees for injuries arising out of and in the course of
employment.” Id. Yet we said that Ballalatak’s “internal complaints”
about his employer’s failure to comply with these duties did not amount
to protected activity. Id. We acknowledged that, at least for purposes of
summary judgment, Ballalatak’s “motives were to ensure compliance
with the law and benefits for those under his supervision.” Id. However,
“Ballalatak ha[d] not pointed to any Iowa law which clearly expresses
protection for such actions,” i.e., his actions. Id.
All of this was consistent, as noted above, with our bedrock rule in
Iowa that the employee must have engaged in the protected activity. See
Berry, 803 N.W.2d at 110; Ballalatak, 781 N.W.2d at 275; Jasper, 764
42
N.W.2d at 761; George, 762 N.W.2d at 871; Lloyd, 686 N.W.2d at 228;
Davis, 661 N.W.2d at 535; Fitzgerald, 613 N.W.2d at 282 n.2.
IV. No Legislation or Regulation Recognized the Internal
Reporting That Occurred in This Case; It Cannot Be Considered
Protected Activity.
With the foregoing caselaw in mind, I return to this case. Chapter
231C provides, “Any person with concerns regarding the operations or
service delivery of an assisted living program may file a complaint with
the [DIA].” Iowa Code § 231C.7(1) (2007). It further states, “An assisted
living program shall not discriminate or retaliate in any way against a
tenant, tenant’s family, or an employee of the program who has initiated
or participated in any proceeding authorized by this chapter.” Id.
§ 231C.13. Thus, an Iowa statute recognizes outside whistleblowing to
the DIA. See id. § 231C.7(1). An Iowa statute also expressly protects
individuals, such as Dorshkind’s coworker Schiltz, who report
misconduct to the DIA. See id. § 231C.13.
Dorshkind, however, did not complain to the DIA. Nor is there
evidence she intended to complain to the DIA, or threatened to go to the
DIA, or wanted her internal complaints passed along to the DIA. To the
contrary, she was worried the state would find out and there would be
repercussions for Oak Park. Additionally, there is no evidence that any
of Dorshkind’s actions even unwittingly led to the DIA investigation. In
short, this not a case where an employee made, or intended to make, a
statutorily recognized or protected complaint. Cf. George, 762 N.W.2d at
871–72; Teachout, 584 N.W.2d at 300–01; Tullis, 584 N.W.2d at 239–40.
The majority notes accurately that Iowa has a strong statutory
policy of protecting residents of assisted living homes. The stated
purposes of chapter 231C are:
43
a. To encourage the establishment and maintenance
of a safe and homelike environment for individuals of all
income levels who require assistance to live independently
but who do not require health-related care on a continuous
twenty-four-hour per day basis.
b. To establish standards for assisted living programs
that allow flexibility in design which promotes a social model
of service delivery by focusing on independence, individual
needs and desires, and consumer-driven quality of service.
c. To encourage public participation in the
development of assisted living programs for individuals of all
income levels.
Iowa Code § 231C.1(2). And the trial record indicates that Oak Park
violated the law by not providing required training, see Iowa Admin. Code
r. 321—25.34(1)–(4), and by “attempting to obtain or retain a certificate
by fraudulent means, misrepresentation, or by submitting false
information,” Iowa Code § 231C.10(1)(c).
But again, our precedents require a clearly defined and well-
recognized public policy that protects the activity in question, i.e.,
internal reporting. Just because external reporting is the subject of a
clearly defined and well-recognized statutory policy, it does not follow
that internal reporting would be, at least when the employee’s actions did
not result in and were not intended to result in an outside report.
It bears emphasis, as we pointed out in Berry, that a statute
covering a particular activity does not have to directly bar employer
retaliation in order to qualify as a clearly defined public policy. 803
N.W.2d at 111. “There need not be an express statutory mandate of
protection . . . .” Teachout, 584 N.W.2d at 300. It is sufficient if the
statute explicitly recognizes the activity such that an employer’s
retaliatory discharge for engaging in the activity would “conflict with”
achievement of the legislative goal. Lara, 512 N.W.2d at 782. Hence,
even if chapter 231C did not contain section 231C.13 prohibiting
44
retaliation against whistleblowers to the DIA, section 231C.7(1)
authorizing confidential reports to the DIA likely would be enough to
sustain a wrongful termination claim if Dorshkind had been let go for
reporting the records falsification to that agency.
Still, there must be enough in the statute to “clearly imply the
statute protects the specific employment activity in question from
employer retaliation.” Berry, 803 N.W.2d at 111 (emphasis added).
Chapter 231C does not mention internal reports at all. Given the
absence of a reference to internal communications, I cannot find chapter
231C “clearly implies” that persons making those kinds of reports are
protected from retaliation.9
An additional consideration here is that the legislature made a
specific decision in 2003 to facilitate the bringing of complaints before
the DIA. See 2003 Iowa Acts ch. 166, §§ 14, 20 (codified at Iowa Code
§§ 231C.7, .13 (Supp. 2003)). It authorized the filing of these complaints,
Iowa Code § 231C.7(1) (2007); it required the identity of persons bringing
complaints to be kept confidential, id.; it directed the DIA to establish a
procedure for handling these complaints, id. § 231C.7(2); and it made it
illegal for an employer to retaliate against anyone who initiated or
participated in a proceeding before the DIA, id. § 231C.13. Given these
9Other states have taken a variety of approaches to public-policy-based
wrongful-discharge claims. See Gerard Sinzdak, Comment, An Analysis of Current
Whistleblower Laws: Defending a More Flexible Approach to Reporting Requirements, 96
Cal. L. Rev. 1633, 1643–44 (2008) (noting that around forty states recognize common
law wrongful-discharge claims arising from a violation of public policy, that some apply
that claim to whistleblowing, and that “the requirements of a common law claim vary
substantially from jurisdiction to jurisdiction . . . includ[ing] whether the whistleblower
must report externally or internally in order to receive protection”). As I have noted,
Iowa has not taken a categorical approach that either extends to or does not extend to
internal complaints. Instead, the focus has been on whether the employee’s internal
complaints were themselves covered by a clearly defined and well-recognized public
policy.
45
express legislative determinations in 2003 to protect external reporting,
but the complete absence of legislative references to internal reporting, I
have grave difficulty concluding that the latter is protected by a clearly
defined and well-recognized public policy embodied in legislation. We
made this general point in Ballalatak, noting that the legislature’s
decision to enact anti-retaliation statutes covering “other circumstances”
could not support the employee’s argument that he had engaged in
protected activity in that case. 781 N.W.2d at 278.
The legislature’s decision to limit the scope of sections 231C.7 and
231C.13 to persons who report externally to the DIA is not an
unreasonable choice. After all, as illustrated by this case, an internal
report may never get to the DIA and may not result in corrective action.
In any event, reasonable or not, it is the legislature’s choice, which under
our precedents we are bound to follow.
V. Conclusion.
For the foregoing reasons, I respectfully dissent in part. In my
view, the defendant’s motion for directed verdict on liability should have
been granted.
Waterman and Zager, JJ., join this concurrence in part and
dissent in part.