Susan Ackerman v. State of Iowa, Iowa Workforce Development, Teresa Wahlert, Teresa Hillary, and Devon Lewis , 913 N.W.2d 610 ( 2018 )

IN THE SUPREME COURT OF IOWA
No. 16–0287
Filed June 15, 2018
SUSAN ACKERMAN,
Appellant,
vs.
STATE OF IOWA, IOWA WORKFORCE DEVELOPMENT, TERESA
WAHLERT, TERESA HILLARY, and DEVON LEWIS,
Appellees.
On review from the Iowa Court of Appeals.
Appeal from the Iowa District Court for Polk County, Scott D.
Rosenberg, Judge.
A former administrative law judge whose employment was covered
by a collective bargaining agreement challenges the dismissal of her tort
claim of wrongful discharge in violation of public policy for failure to state
a claim. DECISION OF COURT OF APPEALS AFFIRMED; DISTRICT
COURT JUDGMENT VACATED AND CASE REMANDED.
Wesley T. Graham and William W. Graham of Graham, Ervanian &
Cacciatore, L.L.P., Des Moines, for appellant.
Thomas J. Miller, Attorney General, Jeffrey S. Thompson, Solicitor
General, Jeffrey C. Peterzalek, Matthew T. Oetker, and Susan J.
Hemminger, Assistant Attorneys General, for appellees.
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CADY, Chief Justice.
A state administrative law judge (ALJ) was terminated shortly after
giving unfavorable testimony about the director of her division to the Iowa
Senate Government Oversight Committee. The ALJ, whose employment
was covered by a collective bargaining agreement (CBA), brought a lawsuit
against the State of Iowa, the division, and several named defendants,
alleging, among other claims, wrongful termination in violation of public
policy. The State moved to dismiss the claim, arguing the common law
claim of wrongful discharge is reserved for at-will employees. The district
court granted the State’s motion. The ALJ appealed, and we transferred
the case to the court of appeals. The court of appeals reversed, concluding
contract employees may bring common law wrongful-discharge claims.
We granted the State’s application for further review. For the reasons set
forth below, we find that retaliatory discharge claims are not categorically
reserved for at-will employees.
I. Factual Background and Proceedings.
Under the procedural posture of this case, we accept the well-
pleaded facts as the factual background to examine the legal issues
presented on appeal. See Hedlund v. State, 875 N.W.2d 720, 722 (Iowa
2016).
Susan Ackerman served as an ALJ for the Iowa Workforce
Development (IWD). She worked in the unemployment insurance appeals
bureau. Ackerman began her service as an ALJ in 2000 and was covered
by a CBA between the State of Iowa and the American Federation of State,
County, and Municipal Employees. The CBA provided that employees may
not be suspended, disciplined, or discharged without proper cause. The
contract also protected employees from adverse employment actions taken
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in retaliation for whistleblowing. The agreement further provided for a
grievance procedure.
In 2011, Teresa Wahlert was appointed as director of the IWD by a
newly elected governor of Iowa. She subsequently terminated the bureau’s
chief ALJ and appointed Teresa Hillary and Devon Lewis as the lead
workers of the bureau. Over time, Ackerman believed Wahlert, with the
aid of Hillary and Lewis, engaged in systematic efforts to pressure the ALJs
in the bureau and other employees to render decisions favorable to
employers. She also believed that judges who failed to render decisions
favorable to employers were subjected to harassment.
In August 2014, Ackerman was subpoenaed to testify about her
beliefs and observations before the Iowa Senate Government Oversight
Committee. At the hearing, she testified about a hostile work environment
and the pressure she perceived by Wahlert to issue decisions in favor of
employers. She said she felt powerless to stop Wahlert from improperly
influencing the decisions issued by the bureau.
In December 2014, Wahlert suspended Ackerman, pending an
investigation into allegations of misconduct. Ackerman believed that the
allegations were baseless and that her suspension was done in retaliation
for providing truthful testimony to the senate committee.
In January 2015, Ackerman was terminated from her employment.
She subsequently filed a lawsuit against IWD, Wahlert, Hillary, and Lewis.
In her petition, she alleged the defendants (1) retaliated against her for
disclosing information to public officials in violation of Iowa Code section
70A.28 (2015); (2) defamed her; (3) intentionally interfered with
contractual relations; (4) breached the State of Iowa’s Manager and
Supervisors Manual, of which she is a third-party beneficiary; (5) disclosed
confidential personnel records in violation of Iowa Code section 22.7;
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(6) violated her constitutional rights under the First Amendment;
(7) intentionally inflicted emotional distress, and (8) wrongfully discharged
her in violation of public policy.
The defendants subsequently moved to dismiss the common law
retaliatory discharge claim in count VIII. The defendants solely argued
that the claim is reserved for at-will employees, and because Ackerman’s
employment was covered by a CBA, she could not bring the claim. The
district court agreed and dismissed the claim, concluding “[t]o the extent
that the agreement provides for a remedy relating to wrongful discharge,
Plaintiff is not allowed to apply the narrow exception Iowa courts have
reserved for at-will employment to her current situation.”
Ackerman appealed and the court of appeals reversed. The court
explained that although the common law action of retaliatory discharge is
available to at-will employees and indeed has been recognized as an
exception to the at-will employment doctrine, such availability does not
categorically foreclose recognizing the tort for contract employees. The
court found the tort was adopted to protect those with a compelling need
for protection from wrongful or retaliatory discharge, and CBA-covered
employees indeed require such protection. Accordingly, the court
concluded that Ackerman’s status as a CBA-covered employee did not
preclude her wrongful-discharge claim. We granted defendants’
application for further review.
II. Standard of Review.
We review district court orders “granting a motion to dismiss for
correction of errors at law.” Berry v. Liberty Holdings, Inc., 803 N.W.2d
106, 108 (Iowa 2011). In reviewing the order, “[w]e view the petition in the
light most favorable to the plaintiff, and will uphold dismissal only if the
plaintiff’s claim could not be sustained under any state of facts provable
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under the petition.” Id. (alteration in original) (quoting Griffen v. State, 767
N.W.2d 633, 634 (Iowa 2009)).
III. Analysis.
A. Development of Common Law. The resolution of this case
ultimately rests upon “our duty to develop and announce the common law”
when resolving disputes. Thompson v. Stearns Chem. Corp., 345 N.W.2d
131, 134 (Iowa 1984). This body of law is derived from the principles,
traditions, and practices developed by courts through the process of
justice and allows the civil law to grow and change from one generation to
the next in response to changes observed in the needs and values of
society. In many ways, the process is part of the foundation of the work
of courts in our democratic society and one of the most important
components of the legal process itself.
B. Development of the Retaliatory Discharge Tort. Thirty years
ago, we utilized our authority to recognize the common law tort of
retaliatory discharge in violation of public policy in Springer v. Weeks &
Leo Co., 429 N.W.2d 558, 560–61 (Iowa 1988). In Springer, an at-will
employee was discharged from her employment for pursuing a workers’
compensation claim against her employer. Id. at 559. While our laws at
the time had developed a remedy for tortious interference with a
contractual relationship, no remedy existed to protect at-will employees,
even from discharge based on reasons that violated or frustrated a well-
recognized and defined public policy of our state. Id. at 561. In the
absence of such a remedy, we adopted a cause of action for tortious
termination in violation of public policy. Id.In Springer, we found that our state recognized a public policy for
workers to seek compensation for work-related injuries. Id. at 560. This
policy was clearly expressed in the workers’ compensation statute, and the
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absence of a remedy for at-will employees for discharge in retaliation for
pursuing these rights would frustrate and undermine this
well-defined policy. Id. at 560–61. We acknowledged that contract
employees ordinarily have adequate remedies, but did not specifically
restrict the new tort to noncontract employees. Id. at 561 n.1.
On the heels of Springer, we were presented with the question in
Conaway v. Webster City Products Co., 431 N.W.2d 795, 797 (Iowa 1988),
whether a claim by a CBA-covered employee for retaliatory discharge for
filing a workers’ compensation claim was preempted by the Labor
Management Relations Act. The CBA at issue contained a “grievance and
arbitration procedure to settle disputes, including those involving
employees’ discharges.” Id. at 796. We held the claims were not
preempted by the Act and that the plaintiffs did not need to exhaust the
procedures under the CBA before proceeding to state court on its claims.
Id. at 799–800. Without specifically addressing whether the newly
recognized tort of retaliatory discharge was available to contract
employees, we recognized that the claim for retaliatory discharge brought
by the employees was independent of the CBA. Id. at 800. We concluded
that the claims were “recognizable state tort claims.” Id. Accordingly,
while the plaintiffs in the case were not at-will employees, we made no
suggestion that the new tort was not available to them.
Since Springer and Conaway, our cases that have examined the
retaliatory discharge tort have largely focused on the search for a
well-defined public policy to support the application of the tort beyond the
circumstances of retaliation for filing for workers’ compensation benefits.
Generally, these cases have expanded the tort into four categories of
protected activity. See Jasper v. H. Nizam, Inc., 764 N.W.2d 751, 762 (Iowa
2009) (“[O]ur wrongful-discharge cases that have found a violation of
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public policy can generally be aligned into four categories of statutorily
protected activities: (1) exercising a statutory right or privilege; (2) refusing
to commit an unlawful act; (3) performing a statutory obligation; and
(4) reporting a statutory violation.” (Citations omitted.)). One general
category includes retaliatory discharge for performing a statutory
obligation, such as providing truthful testimony. Id. In Fitzgerald v.
Salsbury Chemical, Inc., 613 N.W.2d 275, 286 (Iowa 2000), we recognized
a clear public policy in Iowa to provide truthful testimony in legal
proceedings. In turn, we found the policy supported a tort claim based on
retaliation for intending to testify in a lawsuit against an employer. Id.Thus, most of our attention to the continuing development of this tort has
focused on the identification of the public policy to support the tort and
on whether the discharge undermined the policy. Generally, these are
questions of law for courts to decide. Id. at 282.
C. Whether Contract Employees May Bring Common Law
Retaliatory Discharge Claims. The sole question presented to the district
court and raised on appeal is one of first impression: whether the tort of
wrongful discharge in violation of public policy is categorically reserved for
at-will employees, such that a contract employee may not state a claim.
Since Springer and Conaway, we have considered many retaliatory
discharge claims brought by at-will employees. While engaging in our
public-policy analysis, we have frequently described the remedy for
retaliatory discharge as an exception to the at-will employment doctrine.
See Jones v. Univ. of Iowa, 836 N.W.2d 127, 144 (Iowa 2013) (adjudicating
an at-will employee’s retaliatory discharge claim and describing the claim
as “an exception to Iowa’s general rule that employment is at-will”);
Dorshkind v. Oak Park Place Dubuque II, L.L.C., 835 N.W.2d 293, 300 (Iowa
2013) (adjudicating an at-will employee’s retaliatory discharge claim and
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describing the claim as “a public-policy exception to the general rule of
at-will employment”); Berry, 803 N.W.2d at 109 (adjudicating an at-will
employee’s retaliatory discharge claim and describing the claim as “a
narrow public-policy exception to the general rule of at-will employment”);
Ballalatak v. All Iowa Agric. Ass’n, 781 N.W.2d 272, 275 (Iowa 2010)
(same); Jasper, 764 N.W.2d at 762 (same); Theisen v. Covenant Med. Ctr.,
Inc., 636 N.W.2d 74, 79 (Iowa 2001) (same); Fitzgerald, 613 N.W.2d at 281(same); Huegerich v. IBP, Inc., 547 N.W.2d 216, 220 (Iowa 1996) (same);
Anderson v. Douglas & Lomason Co., 540 N.W.2d 277, 282 (Iowa 1995)
(assessing whether the employee was at will and describing retaliatory
discharge claims as a “narrow deviation[]” from the general at-will
employment doctrine); Niblo v. Parr Mfg., Inc., 445 N.W.2d 351, 352 (Iowa
1989) (adjudicating an at-will employee’s retaliatory discharge claim and
describing the claim as a “public policy exception”).
The defendants now use this tendency to support their position that
the tort was never intended to apply to employees other than at-will
employees who otherwise would have no remedy. The court of appeals
rejected this argument as invalid deductive reasoning. 1
Additionally, we have not exclusively characterized the tort as an
exception to the at-will employment doctrine. See, e.g., Teachout v.
Forest City Cmty. Sch. Dist., 584 N.W.2d 296, 299 (Iowa 1998) (“Even an
employee at will, however, may not be terminated for a reason contrary to
public policy.” (Emphasis added.)); Sanford v. Meadow Gold Dairies, Inc.,
534 N.W.2d 410, 412 (Iowa 1995) (“Sanford’s retaliatory discharge claim
rests on our holdings that public policy is violated when an employee, even
1The court of appeals aptly described defendants’ argument as “commit[ting] the
fallacy of the inverse (otherwise known as denying the antecedent): the incorrect
assumption that if P implies Q, then not-P implies not-Q.” NLRB v. Noel Canning, 573
U.S. ___, ___, 134 S. Ct. 2550, 2603 (2014) (Scalia, J., concurring).
9
an employee at-will, is discharged as a result of seeking workers’
compensation benefits.” (Emphasis added.)).
While a right given to benefit one group would not necessarily
exclude other groups to the right, the “life of the law,” as observed by Chief
Justice Oliver Wendell Holmes, “has not been logic, it has been
experience.” State v. Baldon, 829 N.W.2d 785, 829 (Iowa 2013) (Appel, J.,
concurring) (quoting Oliver Wendell Holmes, The Common Law 1 (1881)).
It is not the product of deductive reasoning, but the accumulations of
those choices made by the democratic process of government, including
the courts, to guide society over time. As a result, if experience reveals
that a right created with one segment of society in mind should extend to
others in society, the law must respond. Accordingly, our prior
characterization of the retaliatory discharge tort as an exception to the
at-will employment doctrine does not confine its common law development
or serve as a limitation into the future. Furthermore, it does not bind us
to a principle of law applicable to the resolution of this case under the
doctrine of stare decisis. Thus, having developed this tort in light of the
experiences of our prior cases, we now consider whether it applies to
contract employees too.
First, it is important to observe that the purpose of the common law
claim of retaliatory discharge is distinct from the purpose of a claim of
breach of contract. Contract claims seek to redress the private interests
and individual promises of the parties. Retaliatory discharge claims,
however, enforce “the communal conscience and common sense of our
state in matters of public health, safety, morals, and general welfare.”
Jasper, 764 N.W.2d at 761. As opposed to merely vindicating the private
interests of the parties, wrongful-discharge claims vindicate the greater
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harm to society when an employee is punished for acting in accordance
with a clear public policy.
In Keveney v. Missouri Military Academy, the Missouri Supreme
Court found the tort of wrongful discharge applies to contract employees
as well as at-will employees. 304 S.W.3d 98, 103 (Mo. 2010) (en banc).
The court noted that “limiting the wrongful discharge cause of action to
at-will employees fails to recognize the distinct underlying purpose of the
wrongful discharge cause of action.” Id. at 102. Whereas a contract claim
“enforces privately negotiated terms and conditions of employment,” a
retaliatory discharge claim “is premised on a conflict between the
conditions of employment and constitutional, statutory, or regulatory
provisions that are applicable irrespective of the terms of contractual
employment.” Id. Further, the discharge underlying the tort is “not
‘wrongful’ because it violates the contractual terms of employment,” but
rather because it is “based on the employer’s attempt to condition
employment on the violation of public policy.” Id.
In Gonzalez v. Prestress Engineering Corp., the Illinois Supreme
Court affirmed the availability of a wrongful-discharge claim for CBA-
covered employees. 503 N.E.2d 308, 313–14 (Ill. 1986). The court noted
the tort “claims asserted arise under the clear mandate of Illinois public
policy, which exists independent of any privately negotiated contract rights
or duties.” Id. at 313. Indeed, a union employee need not exhaust
grievance procedures before asking a court to resolve “a nonderivative
State tort action firmly rooted in an important public policy which
‘proscribe[s] conduct, [and establishes] rights and obligations,
independent of a labor contract.’ ” Id. (alterations in original) (quoting
Allis-Chalmers Corp. v. Lueck, 471 U.S. 202, 212, 105 S. Ct. 1904, 1912
(1985)).
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In Retherford v. AT & T Communications of the Mountain States, Inc.,
the Utah Supreme Court similarly extended retaliatory discharge claims
to contract employees. 844 P.2d 949, 960 (Utah 1992). The court noted
the “primary purpose behind giving employees a right to sue for discharges
in violation of public policy is to protect the vital state interests embodied
in such policies,” and found that it “cannot fulfill such a purpose if [it]
hinge[s] this cause of action on employees’ contractual status and thus
limits its availability to any one class of employees.” Id. In short, a
retaliatory discharge claim “differs in both scope and sanction from any
contractual provision that might limit an employer’s power to discharge an
employee for other than just cause.” Id. at 959. The distinct purposes of
tort and contractual claims support extending the tort to contract
employees who seek to vindicate not only their own interests, but also the
greater interests of society in guaranteeing that vital policies are not
undermined by employer misconduct.
Second, when an employee is discharged in violation of public policy,
the employer commits a wrong both in contract and in tort. “[W]here a
duty recognized by the law of torts exists between the plaintiff and
defendant distinct from a duty imposed by the contract . . . a tort action
[will] lie for conduct in breach of the contract.” Preferred Mktg. Assocs. Co.
v. Hawkeye Nat’l Life Ins., 452 N.W.2d 389, 397 (Iowa 1990). Employers
have a duty to refrain from acting in contravention of established public
policies, and the tort of retaliatory discharge ensures that employees are
not impermissibly sanctioned for exercising guaranteed rights. This duty
to refrain from retaliatory discharge is independent of the duty to uphold
the bargained-for terms of employment.
In Byrd v. VOCA Corp. of Washington, D.C., the District of Columbia
Court of Appeals held contract employees may bring retaliatory discharge
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claims. 962 A.2d 927, 934 (D.C. 2008). The court found that “[d]enying
contract workers the public policy wrongful discharge remedy tends to
‘ignore[] the fundamental distinction between tort and contract actions.’ ”
Id. (second alteration in original) (quoting Smith v. Bates Tech. Coll., 991
P.2d 1135, 1141 (Wash. 2000) (en banc)). The court explained, “The duty
giving rise to the tort remedy is not derived from the covenants of contract,
but rather from the employer’s obligation to conduct its affairs in
conformity with fundamental public policy.” Id.Importantly, retaliatory discharge is an intentional tort. Jasper, 764
N.W.2d at 769. Nowhere in our law does a contractual employee
surrender, by virtue of signing an employment contract, the right to bring
a claim for tortious conduct that harms not only the employee, but also
the state’s clear public policy.
Finally, the existence of contract remedies does not preclude the
extension of the tort to contract employees. In jurisdictions that have
declined to permit contract employees to bring retaliatory discharge
claims, courts have generally found that existing contract remedies are
sufficient and obviate the need for the common law claim. See, e.g., Silva
v. Albuquerque Assembly & Distrib. Freeport Warehouse Corp., 738 P.2d
513, 515 (N.M. 1987) (“Obviously, if an employee is protected from
wrongful discharge by an employment contract, the intended protection
afforded by the retaliatory discharge action is unnecessary and
inapplicable.”); Phillips v. Babcock & Wilcox, 503 A.2d 36, 38 (Pa. 1986)
(“[W]e find that a difference in remedies is not enough to justify an
extension of the coverage of the wrongful discharge action.”); Hermreck v.
United Parcel Serv., Inc., 938 P.2d 863, 866 (Wyo. 1997) (“[W]hen another
remedy exists to redress the violation of social policy that resulted in the
employee’s discharge, then no need exists for a court imposed separate
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tort action premised on the violation of public policy.”). The United States
Court of Appeals for the Eighth Circuit has joined in this line of cases and
further predicted that we would not allow contract employees to bring
retaliatory discharge claims partially on this basis. See Hagen v. Siouxland
Obstetrics & Gynecology, PC, 799 F.3d 922, 928–30 (8th Cir. 2015).
Yet, these cases overlook the discrete rationales underlying contract
and tort remedies. “If an employee is discharged for refusing to violate a
public policy requirement, a breach of contract action satisfies private
contractual interests but fails to vindicate the violated public interest or to
provide a deterrent against future violations.” Keveney, 304 S.W.3d at
103. When an employer’s adverse action “violate[s] not only the
employment contract but also clear and substantial public policy, the
‘employer is liable for two breaches, one in contract and one in tort.’ It
follows that the employer must bear the consequences of its actions.” Id.
(quoting Retherford, 844 P.2d at 960). Indeed, when an employee is
wrongfully discharged, “society is equally aggrieved whether the employee
is ‘at will’ or can be discharged only for ‘just cause.’ ” Davies v. Am.
Airlines, Inc., 971 F.2d 463, 469 (10th Cir. 1992) (applying Oklahoma law).
In Coleman v. Safeway Stores, Inc., the Kansas Supreme Court
overturned its previous cases that limited retaliatory discharge claims to
at-will employees. 752 P.2d 645, 651 (Kan. 1988). In three prior cases,
the court had instructed that CBA-covered employees had “an adequate
remedy and [did] not need the protection afforded at-will employees.” Id.
at 649. Yet, upon review, the court recognized its error and found that its
prior “cases stand for the disturbing proposition that an employee subject
to a collective bargaining contract surrenders state tort remedies which
were neither included in the bargaining process nor intended by the
parties to be a part of the contract.” Id. (emphasis added). Moreover, the
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court found its prior decisions effectively granted “employers with
collective bargaining contracts [immunization] from accountability for
violations of state public policy.” Id.
In Retherford, the Utah Supreme Court explained “the vindication of
public policy worked by the tort cause of action cannot be accomplished
by a contractual provision that prohibits discharges for any but just
cause.” 844 P.2d at 960. Contract remedies “satisfy only the private
interests of the parties to the agreement,” whereas retaliatory discharge
remedies “are designed not only to remedy the breach and make the
employee whole, but to deter and punish violations of vital state interests.”
Id. An employer who tortiously fires an employee in contravention of an
established public policy “should be liable for the more expansive penalties
of tort, a potentially harsher liability commensurate with the greater wrong
against society.” Id. Given the multiple harms caused by the employer’s
adverse action, the court saw “no reason to dilute the force of the double
sanction.” Id.
In Norris v. Hawaiian Airlines, Inc., the Supreme Court of Hawaii
similarly extended retaliatory discharge claims to contract employees due
to the necessity of imposing tort remedies. 842 P.2d 634, 647 (Haw. 1992).
The court noted that the CBA at issue, like many CBAs, limited recovery
to reinstatement and back wages. Id. Tort damages, however, may include
special damages, which compensate claimants for specific out
of pocket financial expenses and losses, general damages for
pain, suffering, and emotional distress, and punitive damages
assessed for the purpose of punishing the defendant for
aggravated or outrageous misconduct and to deter defendant
and others from similar conduct in the future.
Id. (citation omitted). The court “conclude[d] that the wide disparity
between the remedies available under the CBA and the damages
potentially recoverable in a state tort action” supported allowing CBA-
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covered employees to bring the tort claim. Id.; see also Dunwoody v.
Handskill Corp., 60 P.3d 1135, 1141 (Or. Ct. App. 2003) (“Given the limited
nature of her contract and the substantial divergence between what she is
entitled to recover under the two different theories, plaintiff’s contract
remedies are not adequate.”).
In Keveney, the Missouri Supreme Court found “it is inconsistent to
allow an at-will employee to pursue an action for wrongful discharge while
denying a contract employee the same right.” 304 S.W.3d at 103. The
court explained that “[a]llowing an at-will employee to pursue an action for
wrongful discharge ‘illogically grants at will employees greater protection
from these tortious terminations due to an erroneous presumption that
the contractual employee does not need such protection.’ ” Id. (quoting
Smith, 991 P.2d at 1141).
Retaliatory discharge “in violation of public policy is an intentional
tort.” Jasper, 764 N.W.2d at 769. Accordingly, the tort’s remedies cover
the complete injury, including economic loss such as wages
and out-of-pocket expenses, as well as emotional harm.
Emotional harm is a personal injury, and economic loss
constitutes property damage. Thus, both personal injury and
property damage are recoverable.
Id. at 769–70 (citation omitted). If a retaliatory discharge “is committed
with either actual or legal malice,” a plaintiff may seek punitive damages.
Id. at 773. Thus, at-will employees would indeed receive “greater
protection” if contract employees could not bring the claim. Keveney, 304
S.W.3d at 103.
Under the defendants’ view, wrongfully terminated CBA-covered
employees already have an adequate remedy, as they may enforce the
CBA’s “just cause” provision. However, we agree with all of the above
jurisdictions that it is incongruous for some employers to be subject to
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deterrent damages for wrongfully discharging an employee, while other
employers are immunized from deterrent damages simply because they
wrongfully terminated a contract, rather than an at-will, employee. The
rationales for awarding punitive damages—punishment and deterrence—
are no less compelling when an employer conditions a contract employee’s
employment on a violation of a clearly established public policy.
When adopting the retaliatory discharge tort in Springer, we indeed
relied, in part, on an at-will employee’s need for protection from improper
interferences with employment. 429 N.W.2d at 561. Yet, we also relied on
the need to guard against the undermining of legislative principles and
schemes by employers who may “abuse their power to terminate by
threatening to discharge employees for” acting in accordance with declared
public policies. Id. (quoting Kelsay v. Motorola, Inc., 384 N.E.2d 353, 357
(Ill. 1978)). Allowing contract employees to bring retaliatory discharge
claims ensures that employers are not only held accountable to the
wronged employee through contract damages, but are also deterred from
future misconduct that is contrary to legislative schemes through tort
damages.
In predicting that we would not allow contract employees to bring a
retaliatory discharge tort, the court in Hagen relied on our holding in
Harvey v. Care Initiatives, Inc., 634 N.W.2d 681, 684 (Iowa 2001), that an
independent contractor of a nursing home could not bring a claim for
retaliatory discharge against public policy. Hagen, 799 F.3d at 930. In
Harvey, an independent contractor was terminated after filing a complaint
against a nursing home. 634 N.W.2d at 682–83. While we observed the
distinctions between employees and independent contractors in Harvey,
including the disparate bargaining position that normally leaves at-will
employees without a remedy, we did not refuse to extend the tort to
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independent contractors based on the expectations that they would have
contract protections. Id. Instead, we found the statute used by the
independent contractor in Harvey to establish the protected activity to
support the tort in the case only extended to nursing home residents and
employees of nursing homes. Id. at 685–86. Thus, the independent
contractor could not establish the critical public policy element of the tort
that protected independent contractors in engaging in the activity that
resulted in the discharge. Id. at 686. In fact, we concluded that the tort
remedy first recognized in Springer would have applied to the independent
contractor in Harvey if the statute that prohibited discharge for filing a
complaint had been written more broadly to cover independent
contractors. Id. at 685.
Likewise, in New Horizons Electronics Marketing, Inc. v. Clarion Corp.
of America, the Appellate Court of Illinois considered whether independent
contractors may bring retaliatory discharge claims. 561 N.E.2d 283, 285
(Ill. App. Ct. 1990). In Illinois, both at-will and contract employees may
bring retaliatory discharge claims. Id.; see also Midgett v. Sackett-Chi.,
Inc., 473 N.E.2d 1280, 1283 (Ill. 1984) (finding that “in order to provide a
complete remedy it is necessary that the victim of a retaliatory discharge
be given an action in tort, independent of any contract remedy the
employee may have based on the collective-bargaining agreement”).
However, the court noted that, despite expansion beyond the at-will
context, the court had not “expanded the tort outside of the employment
setting.” New Horizons Elecs. Mktg., 561 N.E.2d at 285. The court
explained the tort of retaliatory discharge is premised
on the recognition that “employer and employee do not stand
on equal footing,” and a proper balance must be maintained
among the employee’s interest in operating a business
efficiently and profitably, the employee’s interest in earning a
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livelihood and society’s interest in seeing its public policies
carried out.
Id.While the absence of a remedy to correct a wrong was an important
factor in creating the tort for retaliatory discharge thirty years ago, it does
not drive us so much in deciding whether to extend the tort to contract
employees today. Instead, we are driven by other factors, such as ensuring
that victims of intentional torts are fully compensated and that legislative
schemes and public policy are not undermined. Accordingly, we hold
contract employees may bring common law claims alleging wrongful
termination in violation of public policy.
D. Effect of Ackerman’s Statutory Remedy. Although we find
that contract employees, generally, may bring retaliatory discharge claims,
Ackerman’s specific claim is not so easily resolved. Extending the tort to
CBA-covered employees ensures the victim of an intentional tort is fully
compensated and legislative schemes are not undermined. However,
Ackerman is not a private contract employee, but rather a state employee
who is aided by the additional safeguard of a statutory claim.
Iowa Code section 70A.28 provides a direct cause of action for state
employees who suffer adverse employment actions in retaliation for
whistleblowing. Iowa Code § 70A.28. The statute permits a wronged
employee to seek “affirmative relief including reinstatement, with or
without back pay, or any other equitable relief the court deems
appropriate, including attorney fees and costs.” Id. § 70A.28(5)(a).
Ackerman therefore is already provided additional tort remedies for a
purportedly wrongful termination in retaliation for whistleblowing and
indeed brought a claim under section 70A.28 in her petition.
19
On appeal, the defendants recognized Ackerman’s statutory
remedies and, for the first time on further review, argued that we should
find section 70A.28 to be exclusive, such that Ackerman is precluded from
raising a common law claim. The defendants now urge us to look to Van
Baale v. City of Des Moines, which found that chapter 400 is an exclusive
remedy and therefore civil service employees may not bring separate
common law retaliatory discharge claims. 550 N.W.2d 153, 155–56 (Iowa
1996), abrogated on other grounds by Godfrey v. State, 898 N.W.2d 844,
872 (Iowa 2017). Section 70A.28 does not expressly declare that its
remedies are the exclusive vehicle for state employees to recover for a
wrongful discharge in retaliation for whistleblowing. The question, then,
of whether Ackerman’s remedies under section 70A.28 are adequate, such
that she is impliedly precluded from bringing a common law claim, is one
of statutory interpretation.
Here, defendants failed to raise this issue at the district court and,
instead, exclusively argued retaliatory discharge claims are categorically
reserved for at-will employees. This is the issue we decide. The preclusive
effect, if any, of section 70A.28 has not been properly litigated and raised
on appeal and is therefore beyond our reach. Accordingly, we remand the
case to the district court for further resolution of Ackerman’s claim.
IV. Conclusion.
We hold that the common law tort of retaliatory discharge against
public policy is generally available to contract employees. We affirm the
decision of the court of appeals, reverse the decision of the district court,
and remand for further proceedings.
DECISION OF COURT OF APPEALS AFFIRMED; DISTRICT
COURT JUDGMENT VACATED AND CASE REMANDED.
20
All justices concur except Waterman and Mansfield, JJ., who
dissent.
21
#16–0287, Ackerman v. State
WATERMAN, Justice (dissenting).
I respectfully dissent. This is the wrong case to decide whether
contract employees can bring a common law claim for wrongful
termination in violation of public policy, a tort specifically created to
provide a remedy for at-will employees. Susan Ackerman is not a private
contract employee; she is a state employee with both statutory remedies
and contract remedies under a collective bargaining agreement. The
majority ignores the dispositive threshold question of whether a
government employee in Ackerman’s position with statutory remedies can
also sue under the common law tort. The majority hides the ball by failing
to acknowledge that the source of Ackerman’s public policy claim is the
very statute that provides her remedy. Because her common law claim
fails as a matter of law, we should stop there and save for another day the
question of whether the common law tort should remain limited to at-will
employees.
The tort of wrongful discharge in violation of public policy exists only
when two conditions are present: (1) a clearly articulated public policy has
been violated and (2) a compelling need for a tort remedy has arisen
because no other remedy is available. See Dorshkind v. Oak Park Place of
Dubuque II, L.L.C., 835 N.W.2d 293, 303 (Iowa 2013) (“[T]he 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.”); Harvey v. Care Initiatives, Inc., 634 N.W.2d 681, 684
(Iowa 2001) (“In Springer [v. Weeks & Leo Co., 429 N.W.2d 558, 560–61
(Iowa 1988)], we adopted the tort of wrongful discharge primarily out of
need . . . . We reasoned that an employer could otherwise trample on clear
public policy mandates and expectations in terminating employees.”).
22
Ackerman cannot meet the second requirement, which bars her from
bringing this common law tort claim because another remedy is
available—the remedy provided in Iowa Code section 70A.28 (2015).
I would affirm the district court’s ruling dismissing Ackerman’s
common law claim. Ackerman may pursue contract remedies under the
public employee union collective bargaining agreement (CBA). She may
also proceed with her statutory right of action under Iowa Code section
70A.28. There is no need to create a third avenue of recovery, especially
one that is at odds with the governing legislative enactment—section
70A.28. This is not a case involving a wrong without a remedy that cries
out for a judicially created common law tort. Ackerman already has
statutory as well as contractual remedies.
In Harvey, we emphasized that “we must refrain from extending
protection to workers from unfair treatment after our legislature has
weighed in on the issue and established the parameters of the governing
public policy.” 634 N.W.2d at 686. Ackerman relies on section 70A.28 as
the statement of public policy underlying her common law tort claim. But
this same section also provides statutory remedies, rendering this common
law tort claim unavailable to Ackerman.
We allowed at-will employees to bring common law wrongful-
discharge claims providing for punitive damages and emotional distress
damages in order to vindicate important public interests codified in
statutes (such as the right to file a workers’ compensation claim) only when
the statute itself did not create a private right of action to protect that
interest. See Springer, 429 N.W.2d at 560–61. But we have never
recognized a common law claim for wrongful discharge in violation of
public policy when a statute, indeed the same statute providing the source
of the public policy, also codifies a statutory right of action. To do so now
23
flies in the face of the policy choices of the elected branches to disallow
punitive damages and emotional distress damages for government
whistleblowers. See Iowa Code § 70A.28(5)(a) (allowing only
“reinstatement, with or without back pay, or any other equitable relief the
court deems appropriate, including attorney fees and costs”). 2 Under some
circumstances, we can create common law claims that are supplementary
and complementary to preexisting statutes. But we have no business as
a court creating a common law public policy claim at odds with the statute
of origin. Doing so violates the separation of powers. The legislature itself
has defined the scope of the public policy in this enactment governing
lawsuits by state employees discharged for whistleblowing. And the
legislature can have the last word here by overruling today’s decision.
The Restatement of Employment Law, which the majority overlooks,
recognizes the body of law precluding common law wrongful-discharge
public policy torts when, as here, the state’s civil service statute provides
remedies. Comment e to section 5.01, “Wrongful Discharge in Violation of
Public Policy,” states,
Courts have also found that many state civil-service
statutes create a comprehensive regulatory scheme with
adequate remedies against wrongful government-employer
decisions, and thus have precluded common-law public-
policy claims based on violations of these statutes. Civil-
service employees typically cannot recover in tort for a
wrongful discharge in violation of public policy. Courts are
reluctant to recognize a parallel common-law action that
might undermine the civil-service system’s administrative
2In Godfrey v. State, a majority of our court concluded the absence of punitive
damages under the Iowa Civil Rights Act (ICRA) did not make its statutory remedies
inadequate. 898 N.W.2d 844, 881 (Iowa 2017) (Cady, C.J., concurring in part and
dissenting in part) (“While not providing punitive damages, [the ICRA] provides full
compensation and attorney fees. On these facts, I do not believe an independent Bivens-
type action is necessary for the sole purpose of providing a punitive-damages remedy.”);
id. at 893 (Mansfield, J., dissenting) (“Once the legislature has provided a remedy, it is
not the role of the judiciary to provide a different remedy unless the existing remedy is so
deficient as to amount to a denial of due process.”).
24
scheme and its balance between employee and employer
interests.
Restatement of Emp’t Law § 5.01 cmt. e, at 191 (Am. Law Inst. 2015).
Illustration 3 provides,
Employee E is employed by state S and covered by the state’s
civil-service system. That system provides administrative
procedures protecting employees against discharge without
cause and authorizes reinstatement with back pay for
violations. E is summoned for jury duty, and notifies his
supervisor that E will miss work for that reason. E is
discharged for being absent from work while on jury duty. E
has no common-law tort claim for wrongful discharge in
violation of public policy under this Section because the
state’s comprehensive civil-service system provides E with an
adequate remedy.
Id. § 5.01 cmt. e, illus. 3, at 192. I would follow the Restatement.
The majority notes the State did not move for dismissal on the
ground that section 70A.28 provides the exclusive remedy, and
accordingly, the majority does not reach that exclusivity issue. The
majority instead remands the case to the district court.
Yet in Walsh v. Wahlert, we held that a state employee cannot bring
a common law cause of action for wrongful termination in violation of
public policy because the civil service system “provides a comprehensive
framework for the resolution of such claims.” ___ N.W.2d ___, ___ (Iowa
2018) (citing Van Baale v. City of Des Moines, 550 N.W.2d 153, 156 (Iowa
1996), abrogated on other grounds by Godfrey v. State, 898 N.W.2d 844,
872 (Iowa 2017)). Walsh is consistent with the Restatement quoted above
and requires dismissal of Ackerman’s common law wrongful-discharge
claim on remand.
Apart from section 70A.28, Ackerman also has a remedy under the
CBA and Iowa Code section 20.7(3), both of which provide she may only
be terminated for just or proper cause. The State specifically raised this
25
point below, and the district court also relied on it as an additional ground
for dismissal.
Count VIII provides Plaintiff with an additional avenue
for remedy through wrongful discharge. Plaintiff’s
employment is subject to a collective bargaining agreement,
negotiated for her and others in her position. To the extent
that the agreement provides for a remedy relating to wrongful
discharge, Plaintiff is not allowed to apply the narrow
exception Iowa courts have reserved for at-will employment to
her current situation.
I agree with the district court and would decline to extend the
common law tort to contract employees. This common law tort has always
been recognized as a narrow “public-policy exception to the general rule of
at-will employment.” Dorshkind, 835 N.W.2d at 300. We never extended
it to contract employees before today, and in every case allowing the tort,
we noted the employee’s at-will status. I would not abandon the at-will
requirement expressed in all of our decisions to date.
As the majority notes, the United States Court of Appeals for the
Eighth Circuit reviewed our caselaw to hold only at-will employees may
recover under this theory. Hagen v. Siouxland Obstetrics & Gynecology,
PC, 799 F.3d 922, 930–31 (8th Cir. 2015). Many other jurisdictions are in
accord. See, e.g., Keeshan v. Eau Claire Coop. Health Ctrs., Inc., 394 F.
App’x 987, 992–93 (4th Cir. 2010) (per curiam) (Under South Carolina law,
the plaintiff “could not avail herself of the public policy exception [for
wrongful discharge in violation of public policy] because she was not an
at-will employee of” her employer.); Egan v. Wells Fargo Alarm Servs., 23
F.3d 1444, 1446 (8th Cir. 1994) (“[U]nder Missouri law, contract
employees—those employed for a ‘definite term’ and who cannot be
discharged without just cause—have no state law cause of action for
wrongful discharge” because the public-policy exception is limited to at-
will employees.); Fugate v. Frontier W. Va., Inc., No. 2:17-cv-00559, 2017
26
WL 3065216, at *2 (S.D. W. Va. July 19, 2017) (“The common law cause
of action [for wrongful discharge in violation of public policy] recognized
[by the Supreme Court of Appeals of West Virginia] . . . is available only to
at will employees.”); Randleman v. Johnson, 162 F. Supp. 3d 482, 488
(M.D.N.C. 2016) (Under North Carolina law, “the tort of wrongful discharge
arises only in the context of employees at will.” (quoting Wagoner v. Elkin
City Sch.’ Bd. of Educ., 440 S.E.2d 119, 125 (N.C. Ct. App. 1994))); Schroer
v. Baldwin Filters, Inc., No. 8:13CV101, 2013 WL 5781721, at *6 (D. Neb.
Oct. 25, 2013) (“Nebraska case law clearly states being an at-will employee
is a factual prerequisite to asserting a claim for wrongful termination in
violation of public policy.”); Cullen v. E.H. Friedrich Co., 910 F. Supp. 815,
821 (D. Mass. 1995) (Under Massachusetts law, “[t]he cause of action [for
wrongful discharge in violation of public policy] is only available to ‘at-will’
employees.”); Laramee v. French & Bean Co., 830 F. Supp. 803, 806 (D. Vt.
1993) (The protection of employees against “discharges which are in
violation of a clear and compelling public policy . . . is not provided to
employees whose discharge is contractually protected by a just cause
provision of a collective bargaining agreement.” (Citations omitted.));
Tomlinson v. Bd. of Educ. of Bristol, 629 A.2d 333, 347 n.18 (Conn. 1993)
(“[T]he right to recover in tort for wrongful discharge extends only to
employees at will.” (quoting D’Ulisse–Cupo v. Bd. of Dirs., 520 A.2d 217,
220 n.1 (Conn. 1987))); Silva v. Albuquerque Assembly & Distrib. Freeport
Warehouse Corp., 738 P.2d 513, 515 (N.M. 1987) (“Obviously, if an
employee is protected from wrongful discharge by an employment
contract, the intended protection afforded by the retaliatory discharge
action is unnecessary and inapplicable.”); Haynes v. Zoological Soc’y of
Cincinnati, 652 N.E.2d 948, 951 (Ohio 1995) (“[I]n order for an employee
to bring a cause of action [for wrongful termination in violation of public
27
policy], that employee must have been an employee at will.”); Phillips v.
Babcock & Wilcox, 503 A.2d 36, 38 (Pa. 1986) (“[W]e hold that an action
for the tort of wrongful discharge is available only when the employment
relationship is at will.”); Hermreck v. United Parcel Serv., Inc., 938 P.2d
863, 867 (Wyo. 1997) (“Where an employment contract is present, there
does not exist any necessity for invoking a separate action for the tort of
retaliatory discharge as to vindicate public policy.”).
Contract employees have contract remedies. I would follow the
foregoing precedent holding the tort of wrongful discharge in violation of
public policy is only available to at-will employees. And I would not
purport to hold otherwise in a case in which the plaintiff, a government
contract employee who also has statutory remedies, lacks a viable common
law claim.
For these reasons, I respectfully dissent.
Mansfield, J., joins this dissent.