Susan Ackerman v. State of Iowa, Iowa Workforce Development, Teresa Wahlert, Teresa Hillary, and Devon Lewis

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
 3

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;
 4

(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
 5

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
 6

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
 7

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
 8

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
 10

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)).
 11

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
 12

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
 13

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
 14

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-
 15

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
 16

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
 17

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
 18
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.