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Recent Ruling by the Supreme Court of Iowa Puts Limits on Claims for Wrongful Discharge in Violation of Public Policy

By Benjamin Roach

On September 9, 2011, the Supreme Court of Iowa issued its ruling in the case of Nathan Berry v. Liberty Holdings, Inc., a/k/a Liberty Ready Mix (No. 10-0094).  In that ruling, the Supreme Court of Iowa reinstated a district court ruling dismissing a former employee's claim against his employer for wrongful discharge in violation of public policy.  The employee claimed his employer terminated him because he filed a personal injury lawsuit against a company that had common ownership with his employer.  The Court found that the Iowa Comparative Fault Act, Iowa Code Chapter 668, did not provide a clearly defined and well-recognized public policy sufficient to support Mr. Berry's claim.

As background for this ruling, to support a claim of wrongful discharge from employment in violation of public policy, the 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.  This public policy wrongful discharge claim has been recognized by Iowa courts as a narrow exception to the general rule of "at-will" employment.

The key issue in the Berry case was whether Iowa's Comparative Fault Act, which establishes the rules under which parties in Iowa try all tort claims when the action involves "fault" as defined by the statute, met the requirements of a "public policy" sufficient to support a wrongful discharge claim.  The Comparative Fault Act allows the judge or jury to allocate a percentage of fault to each party to the tort case and reduce any award to the plaintiff, or liability of a particular defendant, in proportion to the percentage of fault assigned. 

For Berry, the Supreme Court ruled that the Iowa Comparative Fault Act did not "articulate a clearly defined and well-recognized public policy protecting the filing of a personal injury lawsuit against an employer."  In reaching this ruling, the Supreme Court discussed the background of the public policy wrongful discharge tort and the types of public policies that would support such claims.  To support a wrongful discharge claim, based on a statutory policy, the statute forming the basis of the claimed public policy 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."  With respect to the Iowa Comparative Fault Act, in Berry the Supreme Court stated that, "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."  Based on that interpretation, the Supreme Court ruled that the Iowa Comparative Fault Act cannot be used as a public policy protecting the filing of a personal injury lawsuit to support a wrongful discharge in violation of public policy claimed by an employee.

The direct impact of the Berry case could be somewhat limited.  Most personal injury claims by an employee that involve an employer would fall under Iowa's workers' compensation statute.  This case does not eliminate the recognized cause of action for wrongful discharge in violation of public policy when an employee claims the discharge was related to the filing of a workers' compensation claim.  However, in recent years the Supreme Court had been expanding the scope of wrongful discharge of public policy claims and the list of public policies that could support such claims.  It will be interesting to see whether the Berry decision is the beginning of a trend to limit the scope of the wrongful discharge in violation of public policy claims, or whether it is an isolated case based only on the claim alleged under the Iowa Comparative Fault Act.



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