Failure to Reappoint Equals Wrongful Discharge?
Posted on 03/08/2021 at 04:43 PM by Robert Porter
Mowery’s Teachable Moments for Iowa Counties, Cities, School Districts, Councils, and Boards.
The recent Iowa Court of Appeals ruling in Mowery v. The City of Carter Lake, 19-2014 (Iowa Court of Appeals, filed March 3, 2021) creates significant new risk for cities, counties, school districts, and other entities charged with appointing public employees in Iowa. This article will outline the decision, where things could have been done differently, and a recommended approach.
The Summary of the Case
Doreen Mowery served as the city clerk for the City of Carter Lake for a decade between the mid-1970s and mid-1980s. In 2002, city officials sought to bring Mowery back to her former city clerk role. She agreed, and was appointed to successive two-year terms through 2016.
As an enticement to get Mowery to forego her higher-paying private sector role and return as city clerk, Ms. Mowery sought—and the mayor and council approved—her expectations on salary, raises, leave, and other conditions of employment. The terms of Mowery’s employment were modified from time to time through “letters of understanding” signed by the mayor and Mowery and approved by the city council. Notably, the understanding ratified in 2012 contained the following provisions:
- The “term” of the letter of understanding ran from June 3, 2012 through June 2, 2017.
- If Mowery’s services were “terminated by the Employer during the five-year term of this agreement”, Mowery would get twelve months’ worth of full pay, unused leave reimbursement, and “complete benefits of health, dental, vision and life insurance”.
- However, the letter of understanding also designated Mowery as “an employee-at-will, serving at the pleasure of the Mayor and City Council, as set out in the Code of Iowa and City Ordinances” and specified “this is not a contract for employment”.
In 2016, the makeup of the city council changed, most notably through the election of the city librarian to a council role. Due to a citizen’s concern about whether the librarian could legally draw compensation from both the library and council roles, Ms. Mowery sought an opinion from the City Attorney. The City Attorney concluded that Iowa Code § 372.13(8) prohibited the dual salaries, writing that “while nothing prohibits [the individual] from continuing her employment at the Library while she is serving as a member of the City Council, she cannot receive any wages or salary from that employment while she is serving as a member of the City Council.”
In reliance upon the legal opinion, and in furtherance of the clerk’s obligation under city ordinance to ensure safe custody of City funds and accurate accounting of all disbursements, Ms. Mowery refused to pay both city salaries. This angered the then-current mayor and council members. The opinion notes that several council members met one-on-one to discuss their dissatisfaction with Ms. Mowery. In the next council meeting, the council both appointed a new City Attorney and declined to reappoint Ms. Mowery.
Mowery sued, claiming that the letter of understanding constituted an agreement entitling her to severance due to the non-appointment. She asserted claims based upon breach of contract, promissory estoppel, and retaliatory discharge in violation of public policy.
The City resisted, arguing that the document itself designated Mowery as “an employee-at-will, serving at the pleasure of the Mayor and City Council”, and specified “this is not a contract for employment”. The City also alleged that Mowery was not “terminated”. Rather, the City declined to reappoint Mowery to a new two-year term as city clerk.
The jury ruled in favor of Mowery on all counts, awarding damages for both the promissory estoppel and termination in violation of public policy claims. The Court of Appeals affirmed all of the rulings.
The Court of Appeals found and enforced an agreement between the parties, which included the severance provision. In addition, because the Council didn’t simultaneously appoint a new city clerk, the Court of Appeals found that Mowery may have been terminated as a “holdover” appointee under Iowa Code Section 69.1A. In any event, the Court of Appeals found that the act of refusing to renew the appointment under the facts presented could be evidence of a termination in violation of public policy and a breach of the understanding between Mowery and the City.
Iowa’s political subdivisions constantly consider and appoint public sector employees. Now, under the Mowery ruling, each decision not to reappoint could lead to a money damages lawsuit.
- Avoid Ambiguities.
It is extremely important for a public body to craft clear language for its contracts. Consultation with legal counsel, and ample discussion in the course of the meeting adopting the actions in question, results in both a better work product and a record that can be utilized to defend the entity’s action in subsequent litigation.
In situations where a public entity wants an understanding covering the terms and conditions of employment, it may make sense to tie the length of the agreement with the employee to the natural duration of the appointee’s term. Had the City done so in Mowery, the subsequent litigation may not have had the same result. If the public entity elects to use a term longer than provided by law for an appointment, it may wish to use a clause allowing for contract termination based upon change of law or circumstance, in order to preserve the decision-making ability of subsequently elected or appointed officials. A properly drafted letter of understanding, agreement, or contract of employment can retain employment at-will status.
The same principle on clarity applies to other official actions, such as the creation of a meeting agenda or the crafting of an ordinance or policy. An ambiguous or insufficient agenda can lead to a complaint before the Iowa Public Information Board or a lawsuit for lack of notice. An unclear policy or ordinance can also lead to a legal challenge. Public officials are advised to work with counsel to clarify language and mitigate risk.
- Reach the Right Conclusion.
Mowery identified a potential conflict with a public employee receiving salaries from two different city roles, and sought legal guidance. The City Attorney concluded that Iowa Code § 372.13(8) prohibited the City from paying dual salaries. However, the cited statute contains an explicit exception for situations authorized by Iowa Code § 362.5. Iowa Code § 362.5(3)(a) actually allows “the payment of lawful compensation of a city officer or employee holding more than one city office or position, the holding of which is not incompatible with another public office or is not prohibited by law.”
Provided that the librarian recused herself from city council decisions related to the library, state law could have allowed payment for both roles. This outcome makes more legal sense than the alternative suggestion from the City Attorney that the librarian could continue her employment at the library “without receiving wages or salary from that employment”, a scenario that invites liability under both Iowa Code Chapter 91A and the federal Fair Labor Standards Act.
- Follow the Process.
The City officials in Mowery discussed the clerk’s employment status in a series of 1:1 discussions. Under Iowa law, such conduct may be challenged as an intentional and illegal circumvention of Iowa’s open meetings law. While public employees can and should keep board members appraised of pending action where possible, the number of people involved in pre-meeting discussions should be kept below the threshold of a quorum of the body. Public business must be conducted in public.
Of course, the Council could have held these discussions in a closed session during one of its meetings. When a board or commission seeks to evaluate the professional competency of an employee or potential employee in closed session, it is worth noting that under Iowa Code § 21.5(1)(i) the closed session must be (a) properly noticed; (b) “necessary to prevent needless and irreparable injury to that individual’s reputation”; and (c) requested by the individual who is the subject of the discussion. Unless all three criteria can be satisfied, the discussion should occur in open session. Any formal action resulting from the discussion must occur in open session.
- Preserve the Privilege.
In the Mowery case, the individual board members testified as to their actions and thought processes. While this may have been required in the case, it could have been avoided.
If a board wants to take a specific position to justify an action, it certainly can do so through how the motion is crafted and adopted. If the board elects against providing an explicit policy justification for the action, it generally should not be compelled to do so later. "State courts have consistently refused to permit agency decision makers to be examined about their decision-making processes." State ex rel. Miller v. DeCoster, 608 N.W.2d 785, 790 (Iowa 2000).
It is often advantageous for a board or commission to seek to quash subpoenas for depositions and testimony based upon these recognized mental process and deliberative privileges. This preserves the ability of counsel to argue alternative grounds for supporting the decision made by the board. Counsel can also assert that a reviewing court should “broadly and liberally apply those [board] findings in order to uphold, rather than defeat” the board’s decision. Ward v. Iowa Dept. of Transp., 304 N.W.2d 236, 237 (Iowa 1981).
If you have questions about the impact of this new decision on your operations, or would like advice on your policies and procedures relating to public employment, we encourage you to contact Dickinson Law for a consultation.
Rob Porter practices primarily in employment law, education law, gambling and gaming law, licensing and administrative law, in addition to representing licensed individuals and organizations in regulated industries. For more information on his practice, click here.
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