Hagen v. Siouxland Obstetrics & Gynecology, PC
799 F.3d 922
8th Cir.2015Background
- Siouxland terminated Hagen, president and equity owner, for cause under his employment agreement.
- Hagen alleged breach of contract and a public-policy wrongful discharge claim; a jury awarded over $1 million for public-policy claim.
- District court denied post-trial motions; Siouxland appealed, Hagen cross-appealed.
- The case involved a professional corporation with four Ob/Gyns; Hagen helped recruit three partners and later became president.
- The Employment Agreement provided for termination for willful breach of terms, among other triggers, and Hagen sought to rely on a wrongful-discharge theory.
- District court certified questions to the Iowa Supreme Court; the Iowa Supreme Court declined to answer key questions, leaving the district court’s framing contested.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Iowa recognizes a public-policy wrongful discharge claim by contractual employees | Mahony controls; contractual employees may sue for wrongful discharge. | Contract precludes such tort for employees with contract remedies or independent contractor logic applies. | Contractual employees may not plead wrongful discharge; district court erred; remanded for judgment as a matter of law for defendants. |
| Whether lack of overriding business justification is an independent element of the claim | Protected conduct coupled with lack of overriding justification sustains the claim. | Legitimate business reasons defeat the determining-factor causation requirement. | Not an independent element; business justifications may defeat the determining-factor element. |
| Whether the district court erred in classifying Hagen as an at-will employee for public-policy purposes | Contract did not bar a wrongful-discharge claim; at-will status not required. | Contractual protections bar the tort; Hagen lacked an at-will status necessary to support the claim. | Court held the wrongful-discharge tort does not extend to this contractual physician arrangement; reversed and remanded with judgment for defendants. |
Key Cases Cited
- Fogel v. Trustees of Iowa College, 446 N.W.2d 451 (Iowa 1989) (narrow public-policy exception to at-will employment)
- Ballalatak v. All Iowa Agric. Ass’n, 781 N.W.2d 272 (Iowa 2010) (public policy wrongful discharge acknowledged; recognizes narrow exception)
- Jasper v. H. Nizam, Inc., 764 N.W.2d 751 (Iowa 2009) (limits and defines wrongful discharge public policy tort)
- Harvey v. Care Initiatives, Inc., 634 N.W.2d 681 (Iowa 2001) (endorses limits on extending tort to independent contractors)
- Fitzgerald v. Salsbury Chem., Inc., 613 N.W.2d 275 (Iowa 2000) (articulates elements of wrongful discharge public policy claim)
- Mahony v. Universal Pediatric Services, Inc., 643 F.3d 1103 (8th Cir. 2011) (sets out four-element test for public-policy wrongful discharge)
- Berry v. Liberty Holdings, Inc., 803 N.W.2d 106 (Iowa 2011) (reaffirms narrow scope of public-policy exception)
- Dorshkind v. Oak Park Place of Dubuque II, LLC, 835 N.W.2d 293 (Iowa 2013) (describes public-policy exception; emphasizes well-recognized policies)