Nathan Berry v. Liberty Holdings, Inc. A/K/A Liberty Ready Mix

IN THE SUPREME COURT OF IOWA

No. 10–0094

Filed September 9, 2011

NATHAN BERRY,

Appellant,

vs.

LIBERTY HOLDINGS, INC.

a/k/a LIBERTY READY MIX,

Appellee.

On review from the Iowa Court of Appeals.

Appeal from the Iowa District Court for Polk County, Joel D.

Novak, Judge.

An employer seeks further review of a decision by the court of

appeals reinstating a wrongful discharge claim after the district court

granted the employer’s motion to dismiss. DECISION OF COURT OF

APPEALS VACATED; DISTRICT COURT JUDGMENT AFFIRMED.

Kenneth R. Munro of Munro Law Office, P.C., Des Moines, for

appellant.

Kerrie M. Murphy and Julie L. Tomka of Gonzalez Saggio & Harlan

LLP, West Des Moines, for appellee.

2

WIGGINS, Justice.

The sole issue in this appeal is whether Iowa Code chapter 668

(2007), Iowa’s comparative fault statute, contains a clearly defined and

well-recognized public policy of this state limiting an employer’s

discretion to discharge an at-will employee. The district court sustained

an employer’s motion to dismiss a wrongful discharge claim, where the

employee based the wrongful discharge claim on the allegation that the

employer discharged him for filing a personal injury lawsuit against a

company under common ownership with his employer. Our court of

appeals reversed. Because chapter 668 does not express a clearly

defined and well-recognized public policy of this state that would limit an

employer’s discretion to discharge an at-will employee, we vacate the

decision of the court of appeals and affirm the judgment of the district

court.

I. Scope of Review.

We review a district court’s order granting a motion to dismiss for

correction of errors at law. U.S. Bank v. Barbour, 770 N.W.2d 350, 353

(Iowa 2009). In conducting our review, “[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

under the petition.” Griffen v. State, 767 N.W.2d 633, 634 (Iowa 2009)

(quoting Sanford v. Manternach, 601 N.W.2d 360, 363 (Iowa 1999))

(internal quotation marks omitted). In testing the legal sufficiency of the

petition, we accept the facts alleged in the petition as true. McGill v.

Fish, 790 N.W.2d 113, 116 (Iowa 2010); Geisler v. City Council of Cedar

Falls, 769 N.W.2d 162, 165 (Iowa 2009).

3

II. Background Facts and Proceedings.

From the facts pled in the petition, we find the following facts as

true. Brent Voss is a partial owner of two companies, Liberty Holdings,

Inc. and Premier Concrete Pumping, L.L.C. In 2004, Nathan Berry began

working for Liberty Holdings. On June 5, 2006, a concrete pumper truck

owned by Premier struck and injured Berry, who was on his way home

from work. Berry filed a personal injury lawsuit against Premier for the

injuries he sustained in the collision. Berry ultimately settled this claim

within the policy limits of Premier’s insurance coverage.

Approximately nine months after the settlement, on May 1, 2009,

Liberty Holdings terminated Berry’s employment. Subsequently, Berry

filed suit against Liberty Holdings asserting an intentional tort claim for

wrongful termination in violation of public policy. Berry alleged Liberty

Holdings terminated his employment “because he engaged in the

protected activity of bringing a claim for personal injury” against Premier.

In response, Liberty Holdings filed a motion to dismiss for failure to

state a claim upon which relief could be granted. Liberty Holdings

argued Berry failed to identify a clearly defined public policy that

“protects an employee’s right to file a civil lawsuit against someone other

than his or her employer.” Liberty Holdings also claimed Berry failed to

plead all the ultimate facts necessary to support his wrongful

termination claim because Berry failed to allege in his petition that

Liberty Holdings terminated him in violation of a clearly defined public

policy.

In his resistance to Liberty Holdings’ motion to dismiss, Berry

clarified that it is clearly public policy in Iowa “to protect people from

termination when they bring actions pursuant to Iowa Code chapter 668

to seek redress for personal injuries caused by the negligence of

4

another.” In response, Liberty Holdings again argued that Berry failed to

allege in his petition that he had a statutory right to file a personal injury

lawsuit, and even if so pled, this right would not have qualified as a

clearly defined public policy.

The district court granted Liberty Holdings’ motion to dismiss.

Berry filed a notice of appeal and we transferred the case to the court of

appeals. The court of appeals reversed the district court’s ruling and

remanded the case for further proceedings. Liberty Holdings filed an

application for further review, which we granted.

III. Discussion and Analysis.

A. The Intentional Tort of Wrongful Discharge. Iowa is an at-

will employment state. This means that, absent 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)). Nevertheless, we

have adopted a narrow public-policy exception to the general rule of at-

will employment. Springer v. Weeks & Leo Co., 429 N.W.2d 558, 560

(Iowa 1988). The public-policy exception to the at-will employment

doctrine limits an employer’s discretion to discharge an at-will employee

when the discharge would undermine a clearly defined and well-

recognized public policy of the state. Jasper v. H. Nizam, Inc., 764

N.W.2d 751, 763 (Iowa 2009); accord Thompto v. Coborn’s Inc., 871

F. Supp. 1097, 1112–13 (N.D. Iowa 1994) (recognizing the public-policy

exception is based on the theory “that the law should not allow

employees to be fired for reasons that violate public policy”).

Accordingly, an at-will employee has a cause of action for wrongful

5

discharge when the reasons for the discharge violate a clearly defined

and well-recognized public policy. Jasper, 764 N.W.2d at 761.

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 employer discharged the employee; and

(4) the employer had no overriding business justification for the

discharge. Lloyd v. Drake Univ., 686 N.W.2d 225, 228 (Iowa 2004); Davis

v. Horton, 661 N.W.2d 533, 535–36 (Iowa 2003). If the employee

succeeds in establishing the claim, he or she is entitled to recover both

personal injury and property damage. Jasper, 764 N.W.2d at 769–70.

B. Presence of a Clearly Defined and Well-Recognized Public

Policy. For Berry to succeed on his claim of wrongful discharge, he

must identify a clearly defined and well-recognized public policy that

would be undermined by his termination from employment. See Lloyd,

686 N.W.2d at 229; Fitzgerald, 613 N.W.2d at 282. Berry identifies

chapter 668, Iowa’s comparative fault statute, which he claims serves as

a source for the public policy of protecting employees from termination

when they seek legal redress for personal injuries caused by the

negligence of another. See, e.g., Jasper, 764 N.W.2d at 762 (recognizing

one category of cases where we have found a violation of public policy to

support a wrongful discharge claim is where the employee is discharged

for exercising a statutory right or privilege).

Though difficult to define, we have stated the concept of public

policy “generally captures the communal conscience and common sense

6

of our state in matters of public health, safety, morals, and general

welfare.” Id. at 761; accord Thompto, 871 F. Supp. at 1117 (recognizing

public policy consists of matters that are fundamental to citizens’ social

rights, duties, and responsibilities). Statutes are the main sources we

have relied upon when identifying public policies to support a wrongful

discharge claim. Jasper, 764 N.W.2d at 762; Harvey v. Care Initiatives,

Inc., 634 N.W.2d 681, 685 (Iowa 2001). We have also recognized that our

constitution and administrative regulations may serve as proper sources

of public policy. Jasper, 764 N.W.2d at 763–64. Conversely, we have

consistently refused to recognize the existence of alleged public policies

based in general and vague concepts of socially desirable conduct,

internal employment policies, or private interests. Id. at 762, 765; Lloyd,

686 N.W.2d at 230.

The statute relied upon must relate to the public health, safety, or

welfare and embody a clearly defined and well-recognized public policy

that protects the employee’s activity. Jasper, 764 N.W.2d at 763–64; see

also Davis, 661 N.W.2d at 536 (recognizing, when identifying public

policy, “we proceed cautiously and will only extend such recognition to

those policies that are well-recognized and clearly defined”). Stated

another way, the source from which an employee seeks to derive a public

policy “must affect a public interest so that the tort advances general

social policies, not . . . individual interests.” Jasper, 764 N.W.2d at 766.

Even if an employee identifies a statute as an alleged source of

public policy, it does not necessarily follow that the statute supports a

wrongful discharge claim. Id. at 765. We have recognized that

“many statutes simply regulate conduct between private

individuals, or impose requirements whose fulfillment does

not implicate fundamental public policy concerns.” The

difficult task for courts is to determine which claims involve

7

public policy and which claims involve private disputes

between employers and employees governed by the at-will

employment doctrine.

Id. (quoting Foley v. Interactive Data Corp., 765 P.2d 373, 379 (Cal.

1988)).

In making this determination, we examine whether the claimed

policy deals with a clear and well-recognized public interest, as opposed

to mere individual interests. Id. Some statutes serve as fundamental

sources of public policy by expressly protecting a specific employment

activity from retaliation by the employer. See, e.g., Tullis v. Merrill, 584

N.W.2d 236, 239 (Iowa 1998) (finding a statute that expressly prohibited

an employer from discharging an employee for filing a claim for wages to

clearly articulate a public policy). Other statutes, although not

containing express protections, may also be a source of public policy as

long as they clearly imply the statute protects the specific employment

activity in question from employer retaliation. See, e.g., Teachout v.

Forest City Cmty. Sch. Dist., 584 N.W.2d 296, 300–01 (Iowa 1998)

(finding the forceful language of the child-abuse reporting statute

impliedly articulates a public policy); Lara v. Thomas, 512 N.W.2d 777,

782 (Iowa 1994) (finding a statute articulated a public policy such that

an employer’s retaliatory discharge conflicted with the statute’s

legislatively declared goals). Nevertheless, “legislative pronouncements

that are limited in scope may not support a public policy beyond the

specific scope of the statute.” Jasper, 764 N.W.2d at 766 (recognizing

courts cannot extend public-policy protection to areas the legislature has

not chosen to protect statutorily).

With these authorities in mind, we must determine whether Iowa’s

comparative fault statute articulates a public policy that precludes

Liberty Holdings from discharging Berry for exercising his right to file a

8

personal injury lawsuit against a company under common ownership

with his employer. 1

Prior to 1982, Iowa was a contributory negligence state. See

Goetzman v. Wichern, 327 N.W.2d 742, 754 (Iowa 1982) (abandoning

contributory negligence as a complete defense to a tort claim and

adopting pure comparative negligence). In 1984 the legislature enacted

Iowa’s comparative fault statute, which codified a modified form of

comparative fault. 1984 Iowa Acts ch. 1293, §§ 1–15 (codified at Iowa

Code ch. 668); accord Reilly v. Anderson, 727 N.W.2d 102, 108 (Iowa

2006). The statute replaced the pure comparative negligence scheme we

had previously adopted. See Goetzman, 327 N.W.2d at 754.

In its description of the statute, the legislature explained the

statute’s purpose related to “liability in tort by establishing comparative

fault as the basis for liability in relation to claims for damages arising

from injury to or death of a person or harm to property.” 1984 Iowa Acts

ch. 1293 (preamble). Accordingly, the statute requires the comparison of

fault of potentially liable parties in cases of negligence, recklessness, and

strict liability. Jahn v. Hyundai Motor Co., 773 N.W.2d 550, 560 (Iowa

2009); accord Bredberg v. Pepsico, Inc., 551 N.W.2d 321, 329 (Iowa 1996)

(recognizing the comparative fault statute allows the fact finder to assign

fault to one or more parties claimed to have contributed to the plaintiff’s

injuries).

1In addition to Iowa’s comparative fault statute, the court of appeals relied on

the Iowa Constitution and court precedent to hold Berry’s right to seek judicial redress

for a wrong is a clearly defined and well-recognized public policy supporting his

wrongful discharge claim. However, at the district court and on appeal, Berry only

identified Iowa’s comparative fault statute as a source of public policy. Accordingly, the

only claim preserved for our review is whether chapter 668 articulates a public policy to

support Berry’s claim. See, e.g., Meier v. Senecaut, 641 N.W.2d 532, 537 (Iowa 2002)

(recognizing a claim must normally be both raised and decided by the district court

before it is preserved for our review). Therefore, we will leave the question unanswered

as to whether the Iowa Constitution, other statues, rules, or our court’s precedent can

be the basis for a public policy supporting Berry’s wrongful discharge claim.

9

We have said, “Iowa’s Comparative Fault Act represents a truly

comprehensive and far-ranging modification and consolidation of Iowa

tort law.” Reilly, 727 N.W.2d at 108–09 (quoting Johnson v. Junkmann,

395 N.W.2d 862, 867 (Iowa 1986)) (internal quotation marks omitted).

Chapter 668 did not create any new causes of action. Rather, it created

a set of rules under which the parties will try all tort actions when the

action involved “fault” as defined by the statute. See Iowa Code

§§ 668.1–.16. Therefore, chapter 668 more closely resembles a statute

that attempts to regulate private conduct and imposes requirements that

do not implicate public policy concerns.

The legislature did not make a policy statement in chapter 668

that implicated the health, safety, morals, or general welfare of the

citizens of this state. Cf. Teachout, 584 N.W.2d at 300–01; Lara, 512

N.W.2d at 782. The legislature also did not protect any specific activities

that indicate the presence of an underlying public policy. Cf. Teachout,

584 N.W.2d at 300–01; Lara, 512 N.W.2d at 782; Springer, 429 N.W.2d

at 560–61. Rather, by enacting chapter 668, the legislature simply

created a framework whereby the fact finder is able to assign fault to one

or more parties claimed to have contributed to a plaintiff’s injuries in

cases of negligence, recklessness, and strict liability.

Accordingly, we conclude chapter 668 does not articulate a clearly

defined and well-recognized public policy protecting the filing of a

personal injury lawsuit against an employer.

IV. Disposition.

We vacate the decision of the court of appeals and affirm the

judgment of the district court because Iowa Code chapter 668, Iowa’s

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

10

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

discretion to discharge an at-will employee.

DECISION OF COURT OF APPEALS VACATED; DISTRICT

COURT JUDGMENT AFFIRMED.

All justices concur except Mansfield, J., who takes no part.