Karen Dorshkind v. Oak Park Place of Dubuque II, L.L.C.

IN THE SUPREME COURT OF IOWA

No. 11–2100

Filed August 2, 2013

KAREN DORSHKIND,

Appellee,

vs.

OAK PARK PLACE OF DUBUQUE II, L.L.C.,

Appellant.

On review from the Iowa Court of Appeals.

Appeal from the Iowa District Court for Dubuque County,

Michael J. Shubatt, Judge.

An employee and an assisted living facility seek further review of a

court of appeals decision affirming a judgment for wrongful termination

and reversing a judgment awarding punitive damages. DECISION OF

COURT OF APPEALS AFFIRMED; DISTRICT COURT JUDGMENT

AFFIRMED IN PART AND VACATED IN PART, AND REMANDED WITH

DIRECTIONS.

Thomas D. Wolle of Simmons Perrine Moyer Bergman PLC, Cedar

Rapids, and Thomas R. Crone of Melli Law, S.C., Madison, Wisconsin, for

appellant.

Mark L. Zaiger and Drew Cumings-Peterson of Shuttleworth &

Ingersoll, P.L.C., Cedar Rapids, for appellee.

2

Ryan G. Koopmans of Nyemaster Goode, P.C., Des Moines, for

amicus curiae Iowa Association of Business and Industry.

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WIGGINS, Justice.

In this appeal, we must decide if an internal complaint by an

employee against an assisted living facility concerning forged training

documents, which the state mandates, gives rise to a wrongful-

termination action. The district court determined a wrongful-termination

suit lies and submitted the case to the jury. The jury returned a verdict

against the assisted living facility for actual and punitive damages. The

facility appealed. We transferred the case to the court of appeals. The

court of appeals affirmed the actual damages claim but reversed on the

punitive damages issue. Both parties asked for further review, which we

granted. On further review, we affirm the decision of the court of appeals

(1) because the employer’s retaliatory discharge of an at-will employee,

who internally reported her employer’s forgery of state-mandated training

documents, violated public policy; and (2) because punitive damages are

not recoverable, due to the fact that at the time of the employee’s

wrongful discharge we did not recognize a public-policy exception to the

at-will employment doctrine based upon a violation of administrative

rules. Accordingly, we remand the case to the district court to enter

judgment consistent with our decision.

I. Facts and Prior Proceedings.

A. Facts. This appeal arose from the district court’s denial of a

motion for directed verdict. Accordingly, we review the facts in the light

most favorable to the party against whom the motion for directed verdict

was made. Iowa R. App. P. 6.904(3)(b); Fly v. Blauvelt, 818 N.W.2d 123,

134 (Iowa 2012). Because Oak Park made the motion for directed

verdict, we review the facts in the light most favorable to Karen

Dorshkind.

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Oak Park Place in Dubuque is an assisted living facility.

Alternative Continuum of Care owns the Dubuque facility, as well as a

network of other assisted living homes all named Oak Park.

Headquarters for the company is in Madison, Wisconsin.1

Oak Park contains 131 beds and has fifty-five employees who

provide patients with several different levels of care. The lowest level of

care includes the administration of medications, assistance with bathing

and dressing, and help with mobility to and from meals.

Oak Park is also certified as a dementia-specific assisted living

program. This means the facility holds itself out as providing specialized

care in a dedicated setting for patients with dementia but may also

provide care to patients without cognitive disorders. In late 2008, Oak

Park had approximately thirteen patients in its dementia program.

Because Oak Park includes a special unit for its patients suffering

from dementia, Oak Park is subject to the provisions in Iowa Code

chapter 231C (2007) and the Iowa Administrative Code rule 321—

25.34(1) (2006),2 which require direct care staff to complete dementia-

specific training. Forgery of documents certifying completion of this

training constitutes a violation of law. See Iowa Code § 231C.14(1), (3)

(imposing civil penalties for noncompliance with regulations and

interfering in any way with an Iowa Department of Inspections and

Appeals (DIA) representative). The DIA is responsible for enforcing these

provisions. Iowa Admin. Code r. 321—26.3.

1References hereafter in the opinion to “Oak Park” refer only to the Dubuque

facility, unless specifically stated otherwise.

2The rules pertaining to elder care in the Iowa Administrative Code have been

restructured since 2008. These rules are now located under the Iowa Department of

Inspections and Appeals (Agency 481) in chapter 69. See Iowa Admin. Code r. 481—

69.30(1)–(5).

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Dorshkind worked at Oak Park from April 10, 2006, to

September 5, 2008. Dorshkind was hired as an at-will employee for the

position of sales and marketing assistant. About six months later, Oak

Park promoted her to marketing director. Dorshkind’s primary

responsibility was to increase the number of patients at Oak Park.

For the first two years of her employment, Dorshkind’s supervisor

was Marthe Jones, the regional marketing director. Thereafter, in April

2008, Dorshkind began reporting to Tim Hendricks, the housing director

for Oak Park. Hendricks reported to Toni Carruthers, the regional

director of operations. Carruthers, in turn, was supervised by Scott

Frank, the CEO and majority owner of the Oak Park network.

During an unannounced inspection by the DIA on July 24, 2008,

Dorshkind witnessed what she believed to be her supervisor, Hendricks,

and the supervisor of the certified nursing assistants at Oak Park, Kristi

Niemer, falsifying state-mandated training documents for the dementia

program. Dorshkind testified that she witnessed Niemer making copies

of test papers and then later saw Niemer with Hendricks in his office with

some stacks of paper. Niemer was filling out answers to what appeared

to be true or false questions. Hendricks had another pile of papers and

was writing on them. A different stack of papers was stamped “post-test”

at the top. Eyewitnesses testified that the two did not attempt to hide

what they were doing. Instead, Hendricks and Niemer told other

employees that their acts were going to “save the day for Oak Park.”

Dorshkind left Hendricks’ office and returned to her own. Pat

True, the director of maintenance at Oak Park, later came by and said he

had also seen Niemer and Hendricks forging training documents. True

had been called into Hendricks’ office to sign a paper. At that time, he

observed the two forging other employees’ names. True told Hendricks

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he should at least use different colored pens to vary the signatures he

was forging on the documents. Hendricks later laughed and recounted

the comment to Denise Schiltz, the director of nursing at Oak Park, who

also witnessed the incident.

Schiltz told Dorshkind she had seen Hendricks and Niemer forging

staff names on the dementia training documents. During testimony,

Schiltz said that none of the training certified in the documents ever

occurred. Schiltz realized Hendricks and Neimer’s conduct constituted

forgery and immediately submitted her resignation on July 24.

For obvious reasons, Dorshkind did not report these concerns to

her then-supervisor, Hendricks. Approximately six weeks after the

incident, Dorshkind called Jones, her former supervisor who was then

working as the marketing director in Madison, which was not a

supervisory position and did not involve human resources

responsibilities. Jones described her relationship to Dorshkind as a

coworker or peer. Jones admitted that at the time of the report, there

was no supervisor–subordinate relationship between her and Dorshkind.

Dorshkind told Jones about the suspected forgery. During her

testimony, Dorshkind explained her rationale for doing so as follows:

“Well, my concern was, number one, for the residents. If tests had been

falsified, I felt that meant that the staff hadn’t had the training. My first

concern was always the residents.” Dorshkind was also concerned Oak

Park would lose its license. While speaking with Jones, Dorshkind

additionally communicated her belief that two employees, including her

supervisor, were having an extramarital affair.

When testifying regarding her conversation with Jones, Dorshkind

stated that Jones asked Dorshkind if she wanted Jones to talk to Tara

Klun, the director of human resources for Oak Park at the Madison

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headquarters. Jones testified, “I said, Karen, I don’t know what to do.

Would you like me to go to human resources and talk to them and see

what path you should take?” Later, Jones added, “I told [Dorshkind] I

would talk to Tara Klun and ask her what she should do in this

situation.”

Dorshkind believed the internal report was a collaborative effort,

even though Jones said she was the first one to raise the question of

whether it should be reported to Klun. Dorshkind had gone to Jones to

get “Marthe’s advice.” However, Dorshkind testified that Jones believed

her going to Klun “would be the best way that we can handle any

situation.”

Jones spoke with Klun on September 3. Klun testified that “she

understood at the time that Ms. Dorshkind and Ms. Jones had just

completed a telephone call before [Jones] came into [Klun’s] office to

talk.” During Jones’s conversation with Klun, Jones reported, “Karen

Dorshkind called me today” and said “Kristi and Tim were falsifying

documents.” Jones specifically stated that the “falsification that had

occurred,” as well as “an illicit personal relationship,” “[wa]s reported by

Ms. Dorshkind.” Jones said, “[W]e [meaning Dorshkind and Jones] don’t

know what to do.”

Klun informed the CEO of both allegations. Klun testified that if

an employee has a problem and wants to make a report, the employee

“would follow the chain of command and go to their supervisor, and if

they didn’t feel comfortable, to the next level and/or human resources.”

On September 4, 2008, Klun and Carruthers went to Oak Park to

investigate the claims. Immediately when Klun arrived, Dorshkind

approached her and said, “Tara, I’m glad you’re here. Can I talk to you

alone[?]” Klun responded, “not now . . . let’s wait until we can talk in

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private.” Klun never spoke with Dorshkind privately to inquire about

what she knew regarding the allegation, which Klun admits, “that she

reported.” During her testimony, Klun explained her rationale for not

approaching Dorshkind as follows:

I believe that she would not have anything further

than what Marthe Jones shared with me, for she shared the

full conversation that she had with Karen. And at the time I

did not feel that she would give me any new information on

the 4th of September.

Klun later reiterated on cross-examination that she believed Jones

“shared with me the entirety” of Dorshkind’s information regarding the

allegations. Jones was the first person who reported the forgery to Klun.

After conducting a two-day investigation, both Klun and

Carruthers concluded there was no validity to Dorshkind’s report of

forgery and an affair. Klun later admitted that her investigation of the

forgery allegations was “very poor.”

The following day, Oak Park terminated Dorshkind’s employment.

In a letter signed by Klun and Carruthers, the basis for the termination

was stated as follows:

After a long 2 day and careful investigation, speaking with

many individuals, ones you specifically mentioned, we have

come to a conclusion that you have not been truthful. Upon

the investigation we learned of several incidents where you

have not been truthful; spreading rumors regarding a false

relationship between two employees, malicious statements

regarding forging of documents, and false statement to a

Regional Director about move in numbers, all with in these

two days. This is jeopardizing and affecting the working

environment at Oak Park.

Due to the above issues, we are at a point where we are

unable to trust you. Therefore, it is in Oak Park’s best

interest to end the relationship effective immediately.

(Emphasis added.) Jones was also fired.

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On September 25 and 29, after receiving a complaint from Schiltz

about the incident on July 24, the DIA conducted an on-site

investigation at Oak Park. In its final report, the DIA concluded certain

state-mandated documents relating to the dementia training program

had been forged. Accordingly, the DIA imposed a civil penalty of $10,000

and barred the facility from admitting any new patients while under

conditional certification status.

B. Prior Proceedings. On September 7, 2010, Dorshkind sued

Oak Park for wrongful discharge of employment in violation of public

policy. Oak Park responded by filing a motion for summary judgment,

arguing no established public policy protects Dorshkind’s activity

because she did not report the alleged misconduct externally to the DIA,

but rather, only internally. Thus, Oak Park urged the district court to

find Dorshkind’s termination does not jeopardize public policy. Oak Park

also alleged there was an overriding business justification for the

discharge.

The district court denied the motion. The matter proceeded to a

jury trial on November 15, 2011. Before resting, Dorshkind moved the

district court to present the issue of punitive damages to the jury. Oak

Park resisted, claiming Iowa has not previously recognized the public

policy asserted by Dorshkind, and thus, punitive damages are not

recoverable. The district court granted Dorshkind’s motion and rejected

Oak Park’s argument. The district court held:

There is a defined public policy to protect residents in

assisted living facilities, particularly those who suffer from

dementia. Toward that end, the State requires training to

ensure that people with dementia receive proper care and are

not abused in any manner. That is the purpose of the

regulation.

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Accordingly, the district court allowed the question of punitive damages

to be submitted to the jury.

Oak Park then moved for directed verdict on the same grounds as

the motion for summary judgment. The district court denied the motion

without explanation.

The jury returned a verdict for Dorshkind, finding Oak Park

terminated her in retaliation for whistleblowing and with a willful and

wanton disregard for the rights or safety of others. Accordingly, the jury

awarded $178,500 in compensatory damages, including $156,000 in lost

pay and benefits and $22,500 in emotional distress damages. The jury

award also included $178,500 in punitive damages. The district court

entered judgment on November 22.

Oak Park timely filed a notice of appeal. We transferred the case to

the court of appeals. The court of appeals affirmed the district court

judgment in part by finding the public-policy exception protected

Dorshkind’s employment from retaliatory termination and consequently,

concluded the district court properly denied Oak Park’s motion for

directed verdict. However, the court of appeals reversed the district

court’s decision to submit the issue of punitive damages to the jury. The

court of appeals held “there has been no specific declaration by our

courts or legislature that internal whistleblowing may be protected under

certain circumstances.”

Both parties sought further review, which we granted.

II. Issues.

The first issue is whether an at-will employee, who was discharged

by her employer after making an internal report of forgery regarding

state-mandated documents certifying dementia training, is protected

from retaliatory termination under the public-policy exception to the at-

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will employment doctrine. The second issue asks whether an at-will

employee who is wrongfully discharged based upon a violation of

administrative rules may recover punitive damages.

III. Standard of Review.

This appeal arises from the district court’s denial of a motion for

directed verdict. Thus, our review is for correction of errors at law.

Estate of Ryan v. Heritage Trails Assocs., Inc., 745 N.W.2d 724, 728 (Iowa

2008). We review the evidence in the light most favorable to the

nonmoving party, taking into consideration all reasonable inferences that

could fairly be made by the jury, regardless of whether the evidence is

contradicted. Slocum v. Hammond, 346 N.W.2d 485, 494 (Iowa 1984).

Our role on appeal is to decide “whether the trial court correctly

determined there was sufficient evidence to submit the issue to the jury.”

Easton v. Howard, 751 N.W.2d 1, 5 (Iowa 2008).

IV. Analysis.

A. At-Will Employment. Employment in Iowa is at will. Berry v.

Liberty Holdings, Inc., 803 N.W.2d 106, 109 (Iowa 2011). Therefore,

unless the employee has a valid contract of employment, “the

employment relationship is terminable by either party ‘at any time, for

any reason, or no reason at all.’ ” Fitzgerald v. Salsbury Chem., Inc., 613

N.W.2d 275, 280 (Iowa 2000) (quoting Phipps v. IASD Health Servs. Corp.,

558 N.W.2d 198, 202 (Iowa 1997)). Yet, the employer’s right to discharge

an employee under an at-will employment contract may be limited by

public policy considerations. Teachout v. Forest City Cmty. Sch. Dist.,

584 N.W.2d 296, 299 (Iowa 1998).

B. Public-Policy Exception. Iowa follows the majority of states

by carving out a public-policy exception to the general rule of at-will

employment for wrongful-discharge claims. See Springer v. Weeks & Leo

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Co., 429 N.W.2d 558, 560 (Iowa 1988) (adopting the public-policy

exception in Iowa).

Public policy is an elusive legal construct. We have previously said

public policy is that which “ ‘generally captures the communal

conscience and common sense of our state in matters of public health,

safety, morals, and general welfare.’ ” Berry, 803 N.W.2d at 110 (quoting

Jasper v. H. Nizam, Inc., 764 N.W.2d 751, 761 (Iowa 2009)). Another

definition includes those matters “fundamental to citizens’ social rights,

duties, and responsibilities.” Id. Once identified, the public policy

“becomes a benchmark in the application of our legal principles.”

Jasper, 764 N.W.2d at 761.

An employee seeking protection under the public-policy exception

in his or her wrongful-discharge claim must prove the following

elements:

(1) the existence of a clearly defined and well-recognized

public policy that protects the employee’s activity; (2) this

public policy would be undermined by the employee’s

discharge from employment; (3) the employee engaged in the

protected activity, and this conduct was the reason the

employer discharged the employee; and (4) the employer had

no overriding business justification for the discharge.

Berry, 803 N.W.2d at 109–10. The first two elements constitute

questions of law to be determined by the court. Fitzgerald, 613 N.W.2d

at 282. If the discharged employee successfully establishes each of these

elements, “he or she is entitled to recover both personal injury and

property damage.” Berry, 803 N.W.2d at 110.

C. Prior Application of the Public-Policy Exception. In Iowa,

we have recognized many situations where the public-policy exception

applies. Below is a selection of cases to illustrate how we have previously

implemented the exception.

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1. Enforcing a statutory right. We have consistently held that an

employee cannot be discharged in retaliation for enforcing a statutory

right. The first case to do so was Springer, 429 N.W.2d 558. There, we

held an employer who terminated an employee for filing a workers’

compensation claim could be liable for wrongful discharge. Id. at 560–

61. We reaffirmed Springer in three subsequent cases. See Clarey v. K-

Products, Inc., 514 N.W.2d 900, 902 (Iowa 1994) (finding sufficient

evidence to support a wrongful-discharge jury verdict in favor of a

plaintiff terminated after filing a workers’ compensation claim); Smith v.

Smithway Motor Xpress, Inc., 464 N.W.2d 682, 685 (Iowa 1990) (holding

even though the discharge did not directly interfere with payment of

benefits, the firing violated public policy, because it would chill the

assertion of workers’ compensation rights and erode the employer’s

obligation to pay valid claims); Niblo v. Parr Mfg., Inc., 445 N.W.2d 351,

353 (Iowa 1989) (deciding there was sufficient evidence to support a

jury’s verdict finding the plaintiff had been terminated for threatening to

file a workers’ compensation claim).

We extended the holding in Springer to persons who filed for

unemployment benefits. Lara v. Thomas, 512 N.W.2d 777, 782 (Iowa

1994). In extending Springer, we reemphasized our language in Smith by

stating, “Employers cannot be permitted to intimidate ‘employees into

foregoing the benefits to which they are entitled in order to keep their

jobs.’ ” Id. (quoting Smith, 464 N.W.2d at 686).

2. Refusal to participate in illegal activity. We have two cases

allowing a wrongful-discharge claim to proceed when an employee

refuses to participate in an illegal activity. The first is Fitzgerald, 613

N.W.2d 275. There, we held an employee had a claim for wrongful

discharge because he intended to testify truthfully in a legal proceeding,

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rather than perjure himself. Id. at 285–86. In reaching this conclusion,

we cited decisions from other jurisdictions that allowed such claims

when an employee refused to commit perjury. Id. at 286. Although,

Fitzgerald did not testify before his discharge, we said the employee must

only show he had a good faith intent to testify truthfully. Id. at 287.

The second case to hold a person cannot be discharged for failing

to participate in illegal activity is Jasper, 764 N.W.2d 751. In Jasper, an

employee refused to work in an understaffed room at a daycare center, a

situation violating the administrative rules issued by the Iowa

Department of Human Services. Id. at 758–59. The daycare provider

then terminated her employment. Id. at 759. In determining the

appropriate public policy, we looked to the administrative regulations of

this state. Id. at 765. We found the department adopted the rules for

the health, safety, and welfare of children in daycare facilities. Id. at

766. Accordingly, we affirmed the jury verdict because Jasper had

presented sufficient evidence to establish she was terminated because

she refused to violate the administrative regulations. Id. at 768.

3. Whistleblowing. A third category of cases where we have said

discharging an employee violates public policy is whistleblowing. We

issued two cases on the same day in September 1998 to discuss this

issue. The first matter was Tullis v. Merrill, 584 N.W.2d 236 (Iowa 1998).

There, Tullis complained internally to the business owner that the

company was not paying his insurance benefits as part of his promised

wages. Id. at 237–38. Tullis claimed this failure to pay wages violated

chapter 91A of the Iowa Code. Id. at 238. Although Tullis could have

filed a complaint with the labor commissioner under Iowa Code section

91A.10, he chose to make a complaint in-house. After doing so, his

employer terminated him. Id.

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He brought a wrongful-discharge action against his employer

based on the public-policy exception to the at-will employment doctrine.

Id. The jury returned a verdict in favor of Tullis’s wrongful-discharge

claim. Id. The employer appealed. Id.

On appeal, the employer argued the public-policy exception only

applied if the employee made the complaint to the labor commissioner

under section 91A.10. Id. at 239. The employer claimed the statute only

protected an employee who made a complaint with the commissioner. Id.

The statute provided:

An employer shall not discharge or in any other manner

discriminate against any employee because the employee has

filed a complaint, assigned a claim, or brought an action

under this section or has cooperated in bringing any action

against an employer.

Iowa Code § 91A.10(5) (1995). In response to this claim, we held public

policy prohibited Tullis’s firing for making a wage claim, and the internal

complaint satisfied this public policy. Tullis, 584 N.W.2d at 239–40.

The other case filed that day was Teachout, 584 N.W.2d 296.

There, a teacher’s assistant claimed the school terminated her after she

reported alleged child abuse to her supervising teacher and orally to the

department of human services. Id. at 298–99. In Teachout, the Code did

not expressly protect an employee for making a complaint of child abuse.

However, the Code did provide

[c]hildren in this state are in urgent need of protection

from abuse. It is the purpose and policy of this [statute] to

provide the greatest possible protection to victims or

potential victims of abuse through encouraging the increased

reporting of suspected cases of such abuse, insuring the

thorough and prompt investigation of these reports.

Iowa Code § 232.67. Therefore, we concluded the public policy of Iowa

protects a person discharged by an employer because he or she makes a

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good faith complaint of child abuse. Teachout, 584 N.W.2d at 300–01.

However, we held Teachout failed to establish a jury question on the

element of causation; she demonstrated only that her “termination

occurred after the District learned she had engaged in a protected

activity,” not that her conduct was a determinative factor. Id. at 302.

Another case dealing with whistleblowing was Ballalatak v. All

Iowa Agriculture Ass’n, 781 N.W.2d 272 (Iowa 2010). In Ballalatak, the

employee claimed he was fired for internally complaining that the

company was not properly handling a fellow employee’s workers’

compensation claim. Id. at 275. In determining whether a claim existed,

we favorably cited an Eighth Circuit Court of Appeals opinion where the

federal court determined we would recognize a public-policy exception to

the employment at-will doctrine when an employee makes an internal

complaint about employee safety. Id. at 277 (citing Kohrt v. MidAmerican

Energy Co., 364 F.3d 894, 902 (8th Cir. 2004)). We found, however, that

the Iowa workers’ compensation statutes did not provide a public-policy

exception for an internal complaint based on a fellow employee’s concern

that the employer may not be complying with Iowa’s workers’

compensation laws. Id. at 278.

D. Application of Legal Principles. With these principles and

jurisprudence in mind, we turn to the case at hand. The jury returned a

verdict for Dorshkind. Thus, the jury resolved the factual issues in the

third and fourth elements by finding Oak Park discharged Dorshkind

because of her whistleblowing and that Oak Park had no overriding

business justification for the discharge. Therefore, we need only address

the first and second elements, which are legal questions—the existence

of a clearly defined and well-recognized public policy that protects

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Dorshkind’s activity and that Dorshkind’s discharge from employment

would undermine this public policy.

1. Clearly defined and well-recognized public policy. To resolve the

issue before us, we must ask whether a clearly defined and well-

recognized public policy exists to bar Dorshkind’s termination for

internal whistleblowing relating to Oak Park’s forgery of state-mandated

training documents for its dementia program. This is a question of law.

Fitzgerald, 613 N.W.2d at 282.

We look primarily to our statutes to determine whether an implied

or express public policy exists but such policies may also be found in our

constitution. Id. at 283; see also Kohrt, 364 F.3d at 899 (applying Iowa

law). The court does not look only to statutes expressly mandating

protection for at-will employees. Fitzgerald, 613 N.W.2d at 283. “[W]e

[also] look to other statutes which not only define clear public policy but

imply a prohibition against termination from employment to avoid

undermining that policy.” Id. However, we do not divine public policy

from internal company policies or agreements. Ballalatak, 781 N.W.2d at

278. Administrative regulations are another source of public policy

“when adopted pursuant to a delegation of authority in a statute that

seeks to further a public policy.” Jasper, 764 N.W.2d at 764. Courts in

other jurisdictions also recognize professional rules as sources of public

policy. See, e.g., Rocky Mountain Hosp. & Med. Serv. v. Mariani, 916 P.2d

519, 523 (Colo. 1996) (holding state-accountancy-board rules may

constitute articulations of public policy in case where a CPA was

terminated in retaliation for complaining to supervisors about

questionable accounting practices).

We cautiously identify policies to support an action for wrongful

discharge under the public-policy exception. We do so because

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[a]ny effort to evaluate the public policy exception with

generalized concepts of fairness and justice will result in an

elimination of the at-will doctrine itself. Moreover, it could

unwittingly transform the public policy exception into a

“good faith and fair dealing” exception, a standard we have

repeatedly rejected.

Fitzgerald, 613 N.W.2d at 283 (citations omitted); accord Lloyd v. Drake

Univ., 686 N.W.2d 225, 230–31 (Iowa 2004) (rejecting a wrongful-

discharge claim lodged by a security guard who was fired after forcibly

restraining a student suspected of assault because the asserted public

policy against crime is generalized, not “clearly defined”). Thus, the

exception is narrowly circumscribed to only those policies clearly defined

and well-recognized to protect those with a compelling need for

protection from wrongful discharge. See, e.g., Harvey v. Care Initiatives,

Inc., 634 N.W.2d 681, 685 (Iowa 2001) (rejecting an independent

contractor’s claim for wrongful discharge by finding “no compelling need,

as we did for at-will employees, to support a wrongful termination tort”).

The “well recognized and clearly defined” requirement ensures

“employers have notice that their dismissal decisions will give rise to

liability.” Fitzgerald, 613 N.W.2d at 282–83.

We have previously held that an employer cannot discharge an

employee because he or she whistleblows if there is a public policy to

protect the integrity and employment of those who uphold the law by

reporting illegalities in the workplace. Teachout, 584 N.W.2d at 300–01.

In other words, whistleblowing is an exception to the at-will employment

doctrine if the public policy of this state requires protection of the public

by ensuring “infractions of rules, regulations, or the law pertaining to

public health, safety, and the general welfare” are properly reported.

Palmer v. Brown, 752 P.2d 685, 689 (Kan. 1988) (applying this principle

under Kansas law).

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We find the Code and our administrative rules support a clearly

defined and well-recognized public policy under the exception to the at-

will employment doctrine. Chapter 231C, governing assisted living

facilities, expressly states the legislature’s findings, purpose, and intent

in enacting chapter 231C as follows:

1. The general assembly finds that assisted living is

an important part of the long-term care continua in this state.

Assisted living emphasizes the independence and dignity of

the individual while providing services in a cost-effective

manner.

2. The purposes of establishing an assisted living

program include all of the following:

a. To encourage the establishment and maintenance of

a safe and homelike environment for individuals of all income

levels who require assistance to live independently but who

do not require health-related care on a continuous twenty-

four-hour per day basis.

b. To establish standards for assisted living programs

that allow flexibility in design which promotes a social model

of service delivery by focusing on independence, individual

needs and desires, and consumer-driven quality of service.

c. To encourage public participation in the development

of assisted living programs for individuals of all income

levels.

3. It is the intent of the general assembly that the

department of elder affairs establish policy for assisted living

programs and that the department of inspections and

appeals enforce this chapter.3

Iowa Code § 231C.1 (2007) (emphasis added).

3To ensure the fulfillment of this intent, the legislature provided a procedure for

lodging complaints concerning the operation of an assisted living facility. See Iowa

Code § 231C.7(1) (“Any person with concerns regarding the operations or service

delivery of an assisted living program may file a complaint with the department of

inspections and appeals.”). Moreover, the legislature prohibited retaliation by the

assisted living program against an employee “who has initiated or participated in any

proceeding authorized by this chapter.” Id. § 231C.13.

20

The legislature, by including a findings, purpose, and intent

provision in chapter 231C, demonstrated a clearly defined and well-

recognized public policy to make assisted living available throughout the

state and to ensure the safety of persons residing in assisted living

facilities. Other provisions of chapter 231C supporting this public policy

include rulemaking authority by the elder affairs department for

certification of assisted living facilities and requiring compliance with fire

and safety standards. Id. §§ 231C.3, .4.

Turning to the administrative rules, we find the legislature clearly

authorized the elder affairs department to promulgate rules regarding the

certification of assisted living facilities “to ensure, to the greatest extent

possible, the health, safety, and well-being and appropriate treatment of

tenants.” Id. § 231C.3(1)(a). Specifically, “[t]he department may also

establish by rule in accordance with chapter 17A minimum standards for

. . . dementia-specific assisted living programs.” Id. § 231C.3(6).

At the time of Dorshkind’s report and discharge, the administrative

rules stated:

25.34(1) All personnel employed by or contracting

with a dementia-specific program shall receive a minimum of

six hours of dementia-specific education and training prior

to or within 90 days of employment or the beginning date of

the contract.

25.34(2) The dementia-specific education or training

shall include, at a minimum, the following:

a. An explanation of Alzheimer’s disease and related

disorders;

b. The program’s specialized dementia care

philosophy and program;

c. Skills for communicating with persons with

dementia;

21

d. Skill for communicating with family and friends of

persons with dementia;

e. An explanation of family issues such as role

reversal, grief and loss, guilt, relinquishing the care-giving

role, and family dynamics;

f. The importance of planned and spontaneous

activities;

g. Skills in providing assistance with instrumental

activities of daily living;

h. The importance of the service plan and social

history information;

i. Skills in working with challenging tenants;

j. Techniques for simplifying, cueing, and redirecting;

and

k. Staff support and stress reduction.

25.34(3) All personnel employed by or contracting

with a dementia-specific program shall receive a minimum of

two hours of dementia-specific continuing education

annually.

25.34(4) An employee who provides documentation of

completion of a dementia-specific education or training

program within the past 12 months shall be exempt from the

education and training requirement of subrule 25.34(1).

Iowa Admin. Code r. 321—25.34(1)–(4).

Thus, the administrative rules specifically articulated a concern for

the health, safety, and welfare of dementia patients in assisted living

facilities. Acting on this concern, the elder affairs department required

the implementation of a training program with accompanying state-

mandated training documents to safeguard dementia patients’ health,

safety, and welfare.

In Teachout, we found language in a statute similar to the language

in chapter 231C and the administrative rules promulgated under chapter

22

231C supported a public policy that made the reporting of child abuse a

protected activity. 584 N.W.2d at 300–01; see also Trombetta v. Detroit,

Toledo & Ironton R.R., 265 N.W.2d 385–88 (Mich. Ct. App. 1978) (stating,

in dicta, that it would have been impermissible for the employee to be

discharged for refusing to falsify pollution control reports that are

required to be filed with the state). As in Teachout, based on the plain

language found in the statutes and rules, we find a strong public policy

to ensure the proper care of dementia patients.

We should not allow an employer to ignore the substance either of

a statute or administrative regulation or the statement of public policy

that it represents. “There is no public policy more important or more

fundamental than the one favoring the effective protection of the lives

and property of citizens.” Palmateer v. Int’l Harvester Co., 421 N.E.2d

876, 879 (Ill. 1981). Accordingly, we find Dorshkind’s whistleblowing,

which involved reporting violations of law that jeopardized the health,

safety, and welfare of dementia patients in an assisted living facility, is

supported by a clearly defined and well-recognized public policy. Thus,

we conclude Dorshkind’s claim satisfies the first element of the public-

policy exception.

2. Discharge undermines public policy. Under the second element,

we must determine whether Dorshkind’s discharge from employment

undermines this public policy. Again, this is a question of law.

Fitzgerald, 613 N.W.2d at 282. We consider the impact of the discharge

on both the dismissed employee and other employees. Id. at 288. “An

essential element of proof to establish the discharge undermines or

jeopardizes the public policy necessarily involves a showing the

dismissed employee engaged in conduct covered by the public policy.”

Id. at 287. If it can be shown the whistleblower engaged in conduct in

23

furtherance of public policy and was dismissed for doing so, and that

discharge will discourage other employees from engaging in the same

conduct, then public policy is undermined. Id. at 288.

Considering such factors, we conclude Dorshkind’s discharge did

undermine the public policy at stake. Dorshkind’s conduct involved

internally reporting what she believed were two coworkers forging state-

mandated training documents pertaining to the care of dementia

patients. Such an act advances a clear public policy. Moreover, the

impact of the dismissal affected Dorshkind by punishing her for

reporting conduct jeopardizing the health, safety, and welfare of

dementia patients.

We next examine the impact of the discharge on other employees.

Dorshkind’s dismissal chills reporting by other employees for similar

workplace illegalities. Cf. Smith, 464 N.W.2d at 685 (holding the

discharge for asserting a workers’ compensation claim violated public

policy, even though there was no direct interference with the payment of

benefits, because it would chill the claiming of workers’ compensation

rights and erode the employer’s obligation to pay valid claims). As the

Eighth Circuit accurately observed when applying Iowa law,

If employers were permitted to discharge employees for such

conduct, then employees would be hesitant to articulate

safety concerns because to do so would potentially put their

jobs at risk. Clearly, a public policy that encourages

employees “to institute [a] new and [to] perfect existing safety

programs” is undermined when an employee can be

discharged for doing exactly what the policy encourages.

Kohrt, 364 F.3d at 902 (quoting Iowa Code § 88.1(1) (2003)). Thus,

allowing employers to fire employees for whistleblowing effectively hangs

a sword of Damocles over the heads of concerned employees like

24

Dorshkind, forcing them to choose between protecting others and

sacrificing their employment.

An additional consideration is that Dorshkind made her complaint

internally. We believe such a claim for internal whistleblowing stands for

a number of reasons.4 First, we have previously held internal reporting

4Other jurisdictions have similarly identified internal whistleblowing as a

protected activity for purposes of establishing wrongful-discharge claims. See, e.g.,

Kearl v. Portage Envtl., Inc., 205 P.3d 496, 500 (Colo. App. 2008) (holding “Colorado has

a clearly expressed public policy against terminating an employee in retaliation for the

employee’s good faith attempt to prevent the employer’s participation in defrauding the

government” in case involving an employee who was fired for reporting concerns to his

superiors about a plan to provide remediation services at a uranium enrichment plant);

Lanning v. Morris Mobile Meals, Inc., 720 N.E.2d 1128, 1130–31 (Ill. App. Ct. 1999)

(holding a food service worker, who was fired for reporting the employer’s unsafe food

preparation practices in violation of the law, had a valid complaint of retaliatory

discharge where she made an internal complaint, not a report to a public official); Moyer

v. Allen Freight Lines, Inc., 885 P.2d 391, 395 (Kan. Ct. App. 1994) (affirming the denial

of a motion for directed verdict in favor of the employee who reported equipment failures

to the company’s management and was subsequently fired, based on protection

afforded to employees reporting “to either company management or law enforcement

officials” (emphasis removed)); Barker v. State Ins. Fund, 40 P.3d 463, 468 (Okla. 2001)

(“Oklahoma law protects both internal and external reporting of whistle-blowers who

establish a sufficient public policy violations from retaliatory discharge.”).

Only the minority of courts refuse to protect an employee who makes an internal

report. See Wholey v. Sears Roebuck, 803 A.2d 482, 496 (Md. 2002) (“To qualify for the

public policy exception to at-will employment, the employee must report the suspected

criminal activity to the appropriate law enforcement or judicial official, not merely

investigate suspected wrong-doing and discuss that investigation with co-employees or

supervisors.”).

Some jurisdictions give less credence to the difference between internal and

external reports, focusing instead on the nature of the claim. See, e.g., Green v. Ralee

Eng’g Co., 78 Cal. Rptr. 2d 16 (Cal.1998) (rejecting termination following the employee’s

internal reports concerning the employer’s alleged failure to comply with inspection

practices mandated by regulations implementing the Federal Aviation Act); Thomas v.

Med. Ctr. Physicians, P.A., 61 P.3d 557, 565–66 (Idaho 2002) (reversing summary

judgment for the employer, where the employee was fired for reporting misconduct to

the supervisor); Connelly v. State, 26 P.3d 1246 (Kan. 2001) (finding state troopers who

internally rejected and protested illegal activity in not enforcing laws designed for the

public safety are protected from retaliatory discharge).

Other states have whistleblower statutes that provide discharged employees with

a cause of action, regardless of whether the report was made internally or externally.

See, e.g., N.D. Cent. Code § 34-01-20(3) (West, current through the 2011 Reg. and Spec.

Sess. of the 62nd Legis. Assemb.) (preventing the termination of an employee who “in

good faith, reports a violation or suspected violation of federal, state, or local law,

25

is actionable, even where an applicable statute describes a method for

lodging the whistleblower’s complaint externally. Tullis, 584 N.W.2d at

239–40 (finding the employee had a valid wrongful discharge claim after

complaining internally to his boss about unpaid wages and not utilizing

the labor commissioner to determine the wages, as provided in Iowa Code

section 91A.10). Second, whether the employee makes the complaint

internally or externally does not change the public-policy considerations

of our state. Third, discharging an employee for making an internal

complaint still undermines the public policy. Fourth, the requirement of

causation assures us the internal report was made to further the public

policy of this state, rather than for other reasons.

Finally, it makes more sense that an employee would first discover

the problem and report it internally before lodging a complaint

externally.5 Moreover, this allows the employer to correct the deficiency

_____________________

ordinance, regulation, or rule to an employer, a governmental body, or a law enforcement

official” (emphasis added)).

Among the courts protecting internal whistleblowers, some have specifically

addressed the advancement of public policy found in the common law, not statutes,

when the employee’s report serves to protect the public’s health, safety, and welfare.

White v. Gen. Motors Corp., 908 F.2d 669, 671 (10th Cir. 1990) (granting protection to

employees who were fired after complaining to management of defects in the installation

of brakes in automobiles); Watassek v. Mich. Dep’t of Mental Health, 372 N.W.2d 617,

621 (Mich. Ct. App. 1985) (upholding wrongful-discharge claim where the employee

internally reported the abuse of patients at a mental-health facility), disapproved of on

other grounds by Phillips v. Butterball Farms Co., 531 N.W.2d 144, 146 n.15 (Mich.

1995). Other courts have protected employees who have made internal reports to

promote workplace safety. See, e.g., Pytlinski v. Brocar Prods., Inc., 760 N.E.2d 385,

388 (Ohio 2002) (protecting an employee who was terminated in contravention of public

policy for complaining to the company’s president about several violations of law,

including OSHA regulations).

5Adhering to this logic, several other jurisdictions actually require the employee

to internally report before making an external report, to afford the employer the

opportunity to cure the problem. See, e.g., Wagner v. City of Holyoke, 404 F.3d 504,

509 (1st Cir. 2005) (holding that under Massachusetts law, the employee could not

bring a claim where he failed to provide written notification to his supervisor before

externally reporting misconduct); Dirrane v. Brookline Police Dep’t, 315 F.3d 65, 72–73

(1st Cir. 2002) (same); Garrity v. Univ. at Albany, 755 N.Y.S. 2d 471, 473 (App. Div.

26

in a reasonably prompt manner. When the government becomes

involved, the employer may take the position that the conduct does not

violate a statute or rule to avoid sanctions. Then, the only resolution is a

legal battle. By first bringing the problem to the attention of the

employer without outside intervention, the matter can be handled

quickly and in a less costly manner. However, if the employer does not

correct a perceived problem, then the authorities can intervene to

determine the extent of the problem and its amelioration.

Accordingly, we find Dorshkind’s internal report of Oak Park’s

violations of law and regulations relating to the forgery of state-mandated

documents for the dementia program is a protected activity as a matter

of law. Preventing the retaliatory termination of internal whistleblowers

not only shields the employee from tortious conduct, but also protects

the public by ensuring “infractions of rules, regulations, or the law

pertaining to public health, safety, and the general welfare” are properly

reported. Palmer, 752 P.2d at 689.

V. Punitive Damages.

Regarding the second issue, the crux of Oak Park’s argument is

that we have not previously recognized a claim for wrongful discharge

arising from an employee reporting a violation of the administrative rules

in question. For authority, Oak Park cites Jasper, where we said,

Although the tort of wrongful discharge in violation of

public policy has been recognized in Iowa for over twenty

years, this case is the first time we have specifically

recognized a cause of action for wrongful discharge arising

from the refusal of the employee to violate administrative

rules. Additionally, there has otherwise been no declaration

that the subject matter of the administrative rules in dispute

_____________________

2003) (rejecting a claim under the New York whistleblower statute where the employee

did not give supervisors reasonable time to investigate and correct problems).

27

in this case were of the type that would support a tort of

wrongful discharge.

764 N.W.2d at 774. In Jasper the public policy involved was derived

solely from an administrative rule. Id.

Here, we derived the public policy from chapter 231C. We used the

administrative rules to show the agency recognized the public policy and

passed rules to protect the patients in assisted living facilities. In

fairness, however, the training requirements were contained in an

administrative rule. See Iowa Admin. Code r. 321—25.34(1)–(4). Thus,

the reported violation is inextricably intertwined with the public policy

supporting the exception to the at-will employment doctrine. Moreover,

the misconduct reported by Dorshkind preceded our holding in Jasper.

Accordingly, as in Jasper, an employer cannot willfully and wantonly

disregard the rights of an employee based upon a violation of an

administrative rule when at the time of the discharge, we did not

recognize administrative rules as a source of public policy. 764 N.W.2d

at 774.

Therefore, the district court erred in submitting Dorshkind’s

punitive damages claim to the jury.

VI. Conclusion and Disposition.

We conclude that an employer’s retaliatory discharge of an at-will

employee, who internally reported her employer’s forgery of state-

mandated training documents for a dementia program in an assisted

living facility, in contravention of state statutes and administrative

regulations, violated public policy. Therefore, we affirm that part of the

court of appeals decision and the district court judgment regarding

actual damages. We also affirm the court of appeals decision, finding the

district court should not have submitted the punitive damages claim to

28

the jury because at the time of Dorshkind’s discharge, we did not

recognize a public-policy exception to the at-will employment doctrine

based upon a violation of administrative rules. Thus, on the punitive

damages issue, we reverse the district court judgment and conclude

Dorshkind is not entitled to punitive damages. We remand the case to

the district court to enter judgment consistent with our decision.

DECISION OF COURT OF APPEALS AFFIRMED; DISTRICT

COURT JUDGMENT AFFIRMED IN PART AND VACATED IN PART,

AND REMANDED WITH DIRECTIONS.

All justices concur except Cady, C.J., who specially concurs, and

Mansfield, Waterman, and Zager, JJ., who concur in part and dissent in

part.

29

#11–2100, Dorshkind v. Oak Park Place of Dubuque II, L.L.C.

CADY, Chief Justice (concurring specially).

I concur in the majority opinion, but write separately to explain two

important points.

First, the protected conduct of internal whistleblowing only relates

to a complaint by an employee of a violation by a coemployee or

supervisor of a statute or regulation. The tort does not protect employees

who lodge internal complaints over legitimate business practices by

employers.

Second, our law protects whistleblowing that is either expressly

protected by statute or impliedly protected by public policy. Our statute

obviously only expressly protects external whistleblowing. But, our

public policy impliedly protects internal whistleblowing because it is a

clear public policy of this state to provide the elderly in Iowa who reside

in assisted living homes a safe and dignified environment. This clear

public policy is important enough that it implies protection for internal

whistleblowing. Employers who choose to operate assisted living centers,

as full partners in this public policy, must be expected to embrace

internal complaints of regulatory or statutory violations by the business

if the public policy is truly to be met. The public policy can be served by

internal whistleblowing just as much, if not more, as by external

whistleblowing.

Our law must assume employers want to comply with the statutory

and regulatory scheme and want to know when their employees are

failing to do so. Accordingly, the public policy of this state promotes and

protects internal whistleblowing.

30

#11–2100, Dorshkind v. Oak Park Place of Dubuque II, L.L.C.

MANSFIELD, Justice (concurring in part and dissenting in part).

I. Introduction.

The majority opinion significantly and, in my view, ill-advisedly

broadens the scope of Iowa’s tort of wrongful discharge in violation of

public policy. Under the majority opinion, any time a worker tells a

coworker about an alleged violation of law related to health, safety, or

welfare, the employer is at risk of litigation if the employer subsequently

terminates that worker’s employment. This decision is contrary to our

precedents, which deferred to the other branches of government in

defining the scope of the tort. Thus, our prior decisions required an

express or implicit legislative or administrative determination to protect

internal reporting. The present expansion of the law eliminates that

requirement and thereby erodes Iowa’s long-standing doctrine of

employment at will. For the reasons set forth herein, I would hold the

plaintiff did not engage in protected activity under Iowa law, and

therefore the defendant’s motion for directed verdict on liability should

have been granted.6

Until today, our law was clear:

To prevail on an intentional tort claim of wrongful

discharge from employment in violation of public policy, an

at-will employee must establish the following elements:

(1) the existence of a clearly defined and well-recognized

public policy that protects the employee’s activity; (2) this

public policy would be undermined by the employee’s

discharge from employment; (3) the employee engaged in the

protected activity, and this conduct was the reason the

6I concur in the result reached by the majority to the extent it affirms the court

of appeals decision to set aside the punitive damage verdict. See Jasper v. H. Nizam,

Inc., 764 N.W.2d 751, 773–74 (Iowa 2009) (“We have refused to permit punitive

damages in an action for retaliatory discharge when the grounds for the discharge have

been recognized for the first time in the instant case to be in violation of public policy.”);

see also Lara v. Thomas, 512 N.W.2d 777, 782 (Iowa 1994).

31

employer discharged the employee; and (4) the employer had

no overriding business justification for the discharge.

Berry v. Liberty Holdings, Inc., 803 N.W.2d 106, 109–10 (Iowa 2011). We

had reiterated that standard many times. See Ballalatak v. All Iowa

Agric. Ass’n, 781 N.W.2d 272, 275 (Iowa 2010); Jasper v. H. Nizam, Inc.,

764 N.W.2d 751, 761 (Iowa 2009); George v. D.W. Zinser Co., 762 N.W.2d

865, 871 (Iowa 2009); Lloyd v. Drake Univ., 686 N.W.2d 225, 228 (Iowa

2004); Davis v. Horton, 661 N.W.2d 533, 535 (Iowa 2003); Fitzgerald v.

Salsbury Chem., Inc., 613 N.W.2d 275, 282 n.2 (Iowa 2000).

This test was not difficult to apply, which was one of its virtues.

The tort required both “the existence of a clearly defined and well-

recognized public policy that protects employee’s activity” and that “the

employee engaged in the protected activity.” Berry, 803 N.W.2d at 109–

10; accord Ballalatak, 781 N.W.2d at 275; Jasper, 764 N.W.2d at 761;

George, 762 N.W.2d at 871; Lloyd, 686 N.W.2d at 228; Davis, 661

N.W.2d at 535; Fitzgerald, 613 N.W.2d at 282 n.2. In other words, the

employee had to have engaged in the activity that the statute or

regulation protected. In the whistleblowing context, this meant the

employee’s activity (i.e., reporting) had to be the subject of a clearly

defined and well-recognized public policy, not merely that the employee

reported on something that was the subject of such a policy. The clearly

defined and well-recognized policy had to cover reporting itself.

Consistent with that law, we had allowed internal whistleblowing

claims to go forward where an applicable statute or regulation expressly

recognized internal reporting. See Tullis v. Merrill, 584 N.W.2d 236, 239–

40 (Iowa 1998) (finding that an internal complaint about the withholding

of wages was protected activity because the statute and regulations

provided that “ ‘an employee would be protected against discharge or

32

discrimination caused by the complaint to the employer’ ” (quoting Iowa

Admin. Code r. 347—36.6(2))). And we had disallowed such claims

where the plaintiff could not point to any statute or regulation that

covered internal reporting. See Ballalatak, 781 N.W.2d at 278 (finding

no protection for “internal complaints based on a concern that the

employer may not be complying with workers’ compensation laws”).

The majority now sweeps away that previously clear legal standard

and replaces it with a series of platitudes about health, safety, and

welfare. Thus, the majority eliminates any distinction between external

reporting and internal reporting with the broad-brush statement,

“[W]hether the employee makes the complaint internally or externally

does not change the public policy considerations of our state.” The

majority also says, “We should not allow an employer to ignore the

substance either of a statute or administrative regulation or the

statement of public policy that it represents.” Quoting an out-of-state

case, the majority adds, “ ‘There is no public policy more important or

more fundamental than the one favoring the effective protection of the

lives and property of citizens.’ ” Palmateer v. Int’l Harvester Co., 421

N.E.2d 876, 879 (Ill. 1981).

These are noble sentiments, but the upshot is: Whenever an

employee speaks to a coemployee about a violation of some law or

regulation that relates to health, safety, or welfare, the employer puts

itself in legal jeopardy if it later discharges that employee. I recognize the

employee still must prove the complaint was the reason for the

discharge, but questions of causation are often disputed and difficult to

prove or disprove. Thus, a business may be reluctant to replace one

employee with another person, whom it believes will do a better job, out

of fear of litigation. This will be a new cost of doing business in Iowa.

33

We have been willing to accept that cost, and ought to continue to

accept that cost, when the employee engaged in clearly defined and well-

recognized protected activity. But there are myriad laws and regulations

relating to “health, safety, and welfare.” There are also many types of

violations, ranging from the serious to the trivial. This case falls

somewhere in the middle. The nursing home’s employees acted

deceitfully in falsifying training records, but there is no indication that

the care received by any resident was affected. Also, employees

participate in workplace discussions all the time. If we make the tort

available whenever employee brings an alleged health, safety, or welfare

violation to the attention of a coemployee, we have truly changed the

nature of that tort in Iowa.

Previously, we said on many occasions that the public-policy

exception in Iowa is a “narrow” exception to employment at will. See,

e.g., Berry, 803 N.W.2d at 109; Ballalatak, 781 N.W.2d at 275; Jasper,

764 N.W.2d at 762; Phipps v. IASD Health Servs. Corp., 558 N.W.2d 198,

202 (Iowa 1997); Lara v. Thomas, 512 N.W.2d 777, 781–82 (Iowa 1994).

This is consistent with the basic policy in Iowa that employers who do

not engage in discrimination and have not entered into collective

bargaining or other express or implied contractual relationships with

their employees should generally be free to hire and fire employees

without fear of having those decisions second-guessed in court. The

majority opinion, I respectfully submit, is inconsistent with this

characterization.

II. The Plaintiff Only Engaged in Internal Reporting, Not

External Reporting.

Oak Park Place is an unsympathetic defendant, and Karen

Dorshkind is a sympathetic plaintiff. Still, I would like to highlight some

34

points in the trial record.7 Dorshkind never went to the Department of

Inspections and Appeals (DIA) with her concerns, and the trial record

indicates she didn’t want the state involved at all. Her “first concern was

always the residents,” but she was also concerned “for the company . . .

what would happen.”

On July 24, 2008, during a site visit by the DIA, two employees of

Oak Park, Tim Hendricks and Kristi Niemer, were apparently engaged in

falsifying training records. They had the office door open and did not

make any effort to conceal their actions from fellow employees.

Dorshkind was one of several employees who observed this activity.

Dorshkind mentioned immediately what she saw to two other employees.

Approximately six weeks later, Dorshkind telephoned her former

supervisor, Marthe Jones, and brought up the incident. As Jones

recalled, Dorshkind “was worried that the State would find out and that

there would be repercussions for Oak Park, and she said she did not

know what to do.” Dorshkind was “afraid” that Oak Park was “going to

lose [its] license.” Dorshkind also told Jones that it appeared Hendricks

and Niemer were having an affair. This was a “feeling” based on her

observations and things she had heard. Jones agreed to contact the

company’s human resources director, and Dorshkind went along with

that plan. Dorshkind never contacted the DIA, nor did anyone relay her

observations to the DIA.

The next day, September 4, 2008, the human resources director

and another manager, also based in Madison, went to Dubuque to

investigate the matter. After two days of interviewing and reviewing

7Like the majority, I present the facts in the light most favorable to Dorshkind,

since she prevailed at trial.

35

documents, they handed a termination letter to Dorshkind that alleged

she had “not been truthful” in several respects, including the

relationship between the two employees, the falsification of training

records, and a matter related to Dorshkind’s own job duties.

Meanwhile, another witness to the July 24 events, Oak Park’s

director of nursing Denise Schiltz, was so upset at what she saw that she

turned in a thirty-day notice of resignation that day. When her term of

employment officially ended, Schiltz contacted the DIA and filed an

anonymous complaint of what she had seen.8 This caused the DIA to

launch another inspection. Following a site visit in late September 2008

brought on by Schiltz’s anonymous complaint, the DIA ultimately

concluded that training documents had indeed been falsified. The DIA

fined Oak Park $10,000 and issued a conditional certificate that

temporarily prohibited Oak Park from admitting new residents.

III. Under Our Whistleblowing Precedents, the Employee Must

Have Engaged in Protected Activity as Measured by a Statute or

Regulation.

Let me now turn to our whistleblowing precedents. The first

reporting or “whistleblowing” case we decided was Tullis. See 584

N.W.2d 236. There we held an employee who had been terminated for

seeking reimbursement of amounts wrongfully withheld from his

paycheck had a cause of action for wrongful discharge. See id. at 240.

We found an explicit statutory underpinning for the employee’s claim.

Iowa law provides, “ ‘An employer shall not discharge or in any other

manner discriminate against any employee because the employee has

8Although Schiltz acknowledged she could have filed an anonymous complaint

with the DIA while she was still working for Oak Park, she waited until she was out of

the facility. She did not believe anyone was in immediate jeopardy.

36

filed a complaint . . . .’ ” Id. at 239 (quoting Iowa Code § 91A.10(5)

(1995)). We specifically found that the employee’s internal letter to his

employer amounted to a “complaint” under the statute. Id. at 239–40

(noting that regulations adopted under the statute provided that “ ‘[a]

complaint to the employer made in good faith would be related to the Act,

and an employee would be protected against discharge or discrimination

caused by the complaint to the employer’ ” (quoting Iowa Admin. Code r.

347—36.6(2))). Accordingly, the employee’s firing violated a clear and

express public policy. Id.

The key point in Tullis was that the employee’s internal demand to

his employer for unpaid wages amounted to a protected complaint under

the statute. “We are convinced, as was the district court, that Tullis’s

formal letter to Merrill constituted a complaint related to unpaid wages

for purposes of applying section 91A.10(5).” Id. at 240. Tullis was thus

an internal reporting case where the statute protected internal reporting.

The same day we decided Tullis, we also decided Teachout v. Forest

City Community School District, 584 N.W.2d 296 (Iowa 1998). Teachout

should be viewed as an external reporting case where the law protected

external reporting. In Teachout, a teacher’s assistant was terminated

after reporting alleged child abuse both within her school and orally to

the Department of Human Services (DHS), although the school was

unaware she had already contacted DHS at the time of her termination.

Id. at 298–99. We emphasized that Iowa law mandated reporting of

suspected child abuse to DHS and provided immunity from civil or

criminal liability for individuals making such reports. Id. at 300 (quoting

Iowa Code §§ 232.73, .75 (1995)). We stated:

Although [the relevant statute] does not specifically mandate

protection for an employee who in good faith makes a report

of suspected child abuse, we think the forceful language of

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the statute articulates a well-recognized and defined public

policy of Iowa from which such protection can be implied.

Id. at 300–01. Having found a “well-recognized and defined public

policy,” we then concluded the school’s knowledge that Teachout

intended to report child abuse to the authorities could support a

wrongful-discharge claim. Id. at 301. As we explained:

It would be contrary to the public policy articulated in our

child abuse laws to allow an employer to take adverse

employment action on the basis of an employee’s intent to

report child abuse. That is because the employer’s action

would have the effect of discouraging the reporting of

suspected abuse in direct opposition to the public policy of

encouraging the reporting of child abuse. Consequently, if

Teachout had a subjective good-faith belief that child abuse

had occurred, she is protected from any retaliatory action by

her employer causally related to her intent or threat to report

the abuse.

Id. at 301.

However, we concluded that Teachout failed to establish a jury

question on the element of causation. She had demonstrated only that

her “termination occurred after the District learned she had engaged in a

protected activity,” not that her conduct was a determinative factor. Id.

at 302.

Teachout does not support the proposition that mere internal

reporting of child abuse would be a protected activity. To the contrary,

even though there was no dispute the plaintiff had relayed her concerns

internally, we implicitly acknowledged this would not amount to

protected activity. We said that we “must” consider whether Teachout’s

intent to report child abuse to DHS “could constitute protected activity so

as to support a claim of retaliatory discharge.” Id. at 301. But of course,

if Teachout had already engaged in protected activity when she told her

principal about the child abuse, it would have been unnecessary for us

38

to consider whether her intent to tell the authorities constituted

protected activity.

In Harvey v. Care Initiatives, Inc., we rejected a wrongful-

termination whistleblowing claim brought by an independent contractor

against a nursing home. 634 N.W.2d 681, 685–86 (Iowa 2001). The

contractor there had “produced documents suggesting she was

terminated for allegedly filing a complaint about the nursing home with

the state’s Department of Inspection and Appeals.” Id. at 682. We

observed that the relevant statutes allowed anyone to file a complaint,

which would be kept confidential, but only protected employees and

residents from retaliation or discrimination. Id. at 685–86. As we put it,

Our legislature has made it clear through section 135C.46

that the prohibition against retaliatory discharge only applies

to residents and employees of the health care facility. If our

legislature wished to extend the prohibition to all persons, it

would have used the term “persons.”

Id. at 686. We also commented more generally that “[w]e find no

compelling need, as we did for at-will employees, to support a wrongful-

termination tort for independent contractors.” Id. at 684.

George, another whistleblowing case, involved a statute that

protected external reports and an employee who lost his job for making

such an external report. See 762 N.W.2d at 871–72. The employee there

alleged he had been terminated for complaining to the division of labor

services about his employer’s failure to take certain safety precautions

during lead abatement jobs. Id. at 866–67. We found the employee had

engaged in protected activity and had a common law cause of action

because Iowa Code section 88.9(3) states “ ‘[a] person shall not discharge

. . . an employee because the employee has filed a complaint . . . under

. . . this chapter.’ ” Id. at 871–72 (quoting Iowa Code § 88.9(3) (2007)).

39

In 2004, the United States Court of Appeals for the Eighth Circuit,

applying Iowa law, held that an electrical utility employee who had been

fired for openly disputing the safety of certain work procedures could

pursue a public-policy wrongful-discharge claim against his employer.

Kohrt v. MidAmerican Energy Co., 364 F.3d 894, 902 (8th Cir. 2004). The

court noted that the Iowa Occupational Safety and Health Act has a

stated policy of “ ‘[e]ncouraging employers and employees in their efforts

to reduce the number of occupational safety and health hazards at their

places of employment, and to . . . institute new and perfect existing

programs for providing safe and healthful working conditions.’ ” Id. at

899 (quoting Iowa Code § 88.1 (2003)). It further emphasized that Iowa

law makes it unlawful for an employer to “ ‘discharge or in any manner

discriminate against an employee because the employee has filed a

complaint . . . .’ ” Id. at 899 (quoting Iowa Code § 88.9(3)).

Thus, although the Eighth Circuit found the issue “not free from

doubt,” it concluded that “the public policy expressed in IOSHA would be

undermined if [the utility] were permitted to discharge an employee for

voicing safety concerns.” Id. at 902. In a footnote, the court pointed out

that the plaintiff had made a “protected complaint” because the

regulations clarified that the definition of complaint includes “internal,

good faith complaints made by an employee directly to an employer.” Id.

at 902 n.4. Kohrt was thus an internal whistleblowing case where the

law expressly protected internal reporting.

By contrast, in Ballalatak, we refused to find a cause of action

where no statute covered the internal reporting in question. That case

involved an employee who was fired after “relaying concerns” that his

employer was not fulfilling its workers’ compensation obligations to two

fellow employees. Ballalatak, 781 N.W.2d at 278. We seemingly

40

approved the Eighth Circuit’s Kohrt decision, and commented that “Kohrt

and Jasper suggest internal whistle-blowing may be protected in certain

circumstances.” Id. at 277. However, we found that Iowa’s workers’

compensation statutes do not “provide support for internal complaints

based on a concern that the employer may not be complying with

workers’ compensation laws.” Id. at 278. As this court put it, “The

public policy found in Iowa’s workers’ compensation statutes strongly

protects injured employees, but does not extend to coworkers or

supervisors who express concerns regarding whether the injured

employees will be properly compensated.” Id.

Just two years ago, we decided Berry, our most recent (until now)

public-policy, wrongful-discharge case. This was not a whistleblowing

case; rather, the case involved an injured employee who had been fired

for bringing a personal injury lawsuit against an affiliate of his employer.

See Berry, 803 N.W.2d at 108–09. We found that “chapter 668, Iowa’s

comparative fault statute, does not contain a clearly defined and well-

recognized public policy of this state that would limit an employer’s

discretion to discharge an at-will employee.” Id. at 112. We emphasized

that we look at statutes, our constitution, and administrative regulations

as the sources of public policy. Id. at 110. A relevant statute must

either “expressly protect[] a specific employment activity from retaliation

by the employer” or “clearly imply . . . the specific employment activity in

question [is protected] from employer retaliation.” Id. at 111.

Berry’s emphasis on the term of the statute to define the scope of

the tort was not new. In the absence of statutory authority, we had

disallowed wrongful-discharge claims brought by employees who

complained about wrongs against fellow workers. See, e.g., Ballalatak,

781 N.W.2d at 278. Likewise, we had denied an independent

41

contractor’s wrongful-termination claim where the statute specifically

protected only employees. See Harvey, 634 N.W.2d at 686. “The use of

statutes maintains the narrow public-policy exception and ‘provide[s] the

essential notice to employers and employees of conduct that . . . can lead

to tort liability.’ ” Ballalatak, 781 N.W.2d at 277 (quoting Jasper, 764

N.W.2d at 763).

Under our precedent until now, an employee who internally

reported an observation of illegal workplace conduct, in the absence of

some statute or regulation recognizing or protecting such reporting, had

not engaged in protected activity for purposes of the wrongful-discharge

tort. If mere internal reporting of illegality were sufficient, then

Ballalatak should have had a wrongful-discharge claim. See id. at 278

(finding no protection for “internal complaints based on a concern that

the employer may not be complying with workers’ compensation laws”).

In Ballalatak, we reiterated that “Iowa’s workers’ compensation statutes

provide a clear public-policy expression that employers are required to

compensate employees for injuries arising out of and in the course of

employment.” Id. Yet we said that Ballalatak’s “internal complaints”

about his employer’s failure to comply with these duties did not amount

to protected activity. Id. We acknowledged that, at least for purposes of

summary judgment, Ballalatak’s “motives were to ensure compliance

with the law and benefits for those under his supervision.” Id. However,

“Ballalatak ha[d] not pointed to any Iowa law which clearly expresses

protection for such actions,” i.e., his actions. Id.

All of this was consistent, as noted above, with our bedrock rule in

Iowa that the employee must have engaged in the protected activity. See

Berry, 803 N.W.2d at 110; Ballalatak, 781 N.W.2d at 275; Jasper, 764

42

N.W.2d at 761; George, 762 N.W.2d at 871; Lloyd, 686 N.W.2d at 228;

Davis, 661 N.W.2d at 535; Fitzgerald, 613 N.W.2d at 282 n.2.

IV. No Legislation or Regulation Recognized the Internal

Reporting That Occurred in This Case; It Cannot Be Considered

Protected Activity.

With the foregoing caselaw in mind, I return to this case. Chapter

231C provides, “Any person with concerns regarding the operations or

service delivery of an assisted living program may file a complaint with

the [DIA].” Iowa Code § 231C.7(1) (2007). It further states, “An assisted

living program shall not discriminate or retaliate in any way against a

tenant, tenant’s family, or an employee of the program who has initiated

or participated in any proceeding authorized by this chapter.” Id.

§ 231C.13. Thus, an Iowa statute recognizes outside whistleblowing to

the DIA. See id. § 231C.7(1). An Iowa statute also expressly protects

individuals, such as Dorshkind’s coworker Schiltz, who report

misconduct to the DIA. See id. § 231C.13.

Dorshkind, however, did not complain to the DIA. Nor is there

evidence she intended to complain to the DIA, or threatened to go to the

DIA, or wanted her internal complaints passed along to the DIA. To the

contrary, she was worried the state would find out and there would be

repercussions for Oak Park. Additionally, there is no evidence that any

of Dorshkind’s actions even unwittingly led to the DIA investigation. In

short, this not a case where an employee made, or intended to make, a

statutorily recognized or protected complaint. Cf. George, 762 N.W.2d at

871–72; Teachout, 584 N.W.2d at 300–01; Tullis, 584 N.W.2d at 239–40.

The majority notes accurately that Iowa has a strong statutory

policy of protecting residents of assisted living homes. The stated

purposes of chapter 231C are:

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a. To encourage the establishment and maintenance

of a safe and homelike environment for individuals of all

income levels who require assistance to live independently

but who do not require health-related care on a continuous

twenty-four-hour per day basis.

b. To establish standards for assisted living programs

that allow flexibility in design which promotes a social model

of service delivery by focusing on independence, individual

needs and desires, and consumer-driven quality of service.

c. To encourage public participation in the

development of assisted living programs for individuals of all

income levels.

Iowa Code § 231C.1(2). And the trial record indicates that Oak Park

violated the law by not providing required training, see Iowa Admin. Code

r. 321—25.34(1)–(4), and by “attempting to obtain or retain a certificate

by fraudulent means, misrepresentation, or by submitting false

information,” Iowa Code § 231C.10(1)(c).

But again, our precedents require a clearly defined and well-

recognized public policy that protects the activity in question, i.e.,

internal reporting. Just because external reporting is the subject of a

clearly defined and well-recognized statutory policy, it does not follow

that internal reporting would be, at least when the employee’s actions did

not result in and were not intended to result in an outside report.

It bears emphasis, as we pointed out in Berry, that a statute

covering a particular activity does not have to directly bar employer

retaliation in order to qualify as a clearly defined public policy. 803

N.W.2d at 111. “There need not be an express statutory mandate of

protection . . . .” Teachout, 584 N.W.2d at 300. It is sufficient if the

statute explicitly recognizes the activity such that an employer’s

retaliatory discharge for engaging in the activity would “conflict with”

achievement of the legislative goal. Lara, 512 N.W.2d at 782. Hence,

even if chapter 231C did not contain section 231C.13 prohibiting

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retaliation against whistleblowers to the DIA, section 231C.7(1)

authorizing confidential reports to the DIA likely would be enough to

sustain a wrongful termination claim if Dorshkind had been let go for

reporting the records falsification to that agency.

Still, there must be enough in the statute to “clearly imply the

statute protects the specific employment activity in question from

employer retaliation.” Berry, 803 N.W.2d at 111 (emphasis added).

Chapter 231C does not mention internal reports at all. Given the

absence of a reference to internal communications, I cannot find chapter

231C “clearly implies” that persons making those kinds of reports are

protected from retaliation.9

An additional consideration here is that the legislature made a

specific decision in 2003 to facilitate the bringing of complaints before

the DIA. See 2003 Iowa Acts ch. 166, §§ 14, 20 (codified at Iowa Code

§§ 231C.7, .13 (Supp. 2003)). It authorized the filing of these complaints,

Iowa Code § 231C.7(1) (2007); it required the identity of persons bringing

complaints to be kept confidential, id.; it directed the DIA to establish a

procedure for handling these complaints, id. § 231C.7(2); and it made it

illegal for an employer to retaliate against anyone who initiated or

participated in a proceeding before the DIA, id. § 231C.13. Given these

9Other states have taken a variety of approaches to public-policy-based

wrongful-discharge claims. See Gerard Sinzdak, Comment, An Analysis of Current

Whistleblower Laws: Defending a More Flexible Approach to Reporting Requirements, 96

Cal. L. Rev. 1633, 1643–44 (2008) (noting that around forty states recognize common

law wrongful-discharge claims arising from a violation of public policy, that some apply

that claim to whistleblowing, and that “the requirements of a common law claim vary

substantially from jurisdiction to jurisdiction . . . includ[ing] whether the whistleblower

must report externally or internally in order to receive protection”). As I have noted,

Iowa has not taken a categorical approach that either extends to or does not extend to

internal complaints. Instead, the focus has been on whether the employee’s internal

complaints were themselves covered by a clearly defined and well-recognized public

policy.

45

express legislative determinations in 2003 to protect external reporting,

but the complete absence of legislative references to internal reporting, I

have grave difficulty concluding that the latter is protected by a clearly

defined and well-recognized public policy embodied in legislation. We

made this general point in Ballalatak, noting that the legislature’s

decision to enact anti-retaliation statutes covering “other circumstances”

could not support the employee’s argument that he had engaged in

protected activity in that case. 781 N.W.2d at 278.

The legislature’s decision to limit the scope of sections 231C.7 and

231C.13 to persons who report externally to the DIA is not an

unreasonable choice. After all, as illustrated by this case, an internal

report may never get to the DIA and may not result in corrective action.

In any event, reasonable or not, it is the legislature’s choice, which under

our precedents we are bound to follow.

V. Conclusion.

For the foregoing reasons, I respectfully dissent in part. In my

view, the defendant’s motion for directed verdict on liability should have

been granted.

Waterman and Zager, JJ., join this concurrence in part and

dissent in part.