Ackerman v. Iowa

• Decision Date: 06 December 2021
• Docket Number: No. 20-2226,20-2226
• Citation: 19 F.4th 1045
• Parties: Susan ACKERMAN, Plaintiff - Appellant v. STATE OF IOWA; Iowa Workforce Development; Teresa A. Wahlert; Teresa Hillary; Devon Lewis; Beth Townsend; Jon Nelson Defendants - Appellees
• Court: U.S. Court of Appeals — Eighth Circuit

19 F.4th 1045

Susan ACKERMAN, Plaintiff - Appellant

v.STATE OF IOWA; Iowa Workforce Development; Teresa A. Wahlert; Teresa Hillary; Devon Lewis; Beth Townsend; Jon Nelson Defendants - Appellees

No. 20-2226

United States Court of Appeals, Eighth Circuit.

Submitted: May 11, 2021

Filed: December 6, 2021

Wesley Timothy Graham, William Wesley Graham, Duncan & Green, Des Moines, IA, for Plaintiff-Appellant.

Kayla Louise Burkhiser Reynolds, Samuel Paul Langholz, Assistant Attorney General, Jeffrey C. Peterzalek, Attorney General's Office, Des Moines, IA, for Defendants-Appellees State of Iowa, Iowa Workforce Development.

Kayla Louise Burkhiser Reynolds, Jeffrey C. Peterzalek, Attorney General's Office, Des Moines, IA, for Defendants-Appellees Teresa A. Wahlert, Teresa Hillary, Devon Lewis, Beth Townsend, Jon Nelson.

Before COLLOTON, WOLLMAN, and KOBES, Circuit Judges.

WOLLMAN, Circuit Judge.

Susan Ackerman brought retaliation, defamation, and intentional infliction of emotional distress claims against her former employer, Iowa Workforce Development (Workforce Development) and the state of Iowa, as well as against certain former supervisors and coworkers. She appeals from the district court's¹ grant of summary judgment in the defendants’ favor. We affirm.

I. Background

Ackerman graduated from law school in 1995 and was employed as an Administrative Law Judge (ALJ) by the State of Iowa in Workforce Development's Unemployment Insurance Appeals Bureau (Bureau) from 2000 until her termination in 2015. Ackerman sought in November 2012 to add her twenty-seven-year-old daughter Catherine Holcombe to her employer-provided health insurance plan for calendar year 2013. At that time and all relevant times thereafter, Iowa state employees could secure employer-provided health insurance for an employee's child who was over the age of twenty-six only if the child was both unmarried and a full-time student. Catherine was separated but not divorced from her husband and had recently moved from Hawaii to Minnesota to attend school. Because of financial constraints, Catherine's divorce was not yet finalized.

Ackerman emailed Workforce Development Human Resources Associate Monica Reynolds, with whom she had worked for several years, to inquire whether Catherine was eligible for enrollment as an unmarried, full-time student dependent. Ackerman wrote, "I've looked at that web site for the dependent tax consequences and it seems that I can only get coverage for Cathy if she is unmarried???" Reynolds responded that she thought Catherine was unmarried, to which Ackerman replied, "No, her husband is still in Hawaii but will probably be moving back here next year." Reynolds responded, "Who has to know she is married??" Ackerman thereafter enrolled Catherine in the health plan, through which Catherine received benefits during 2013.

Ackerman re-enrolled Catherine in the 2014 health plan during November 2013. Ackerman completed a "Full-Time Student Verification Form," on which she checked a box indicating that Catherine was not married.² An accompanying "Certification of Full-Time Student Status" form bearing Ackerman's signature contained the following certifying statement:

I am providing this information to my employer for insurance enrollment and tax reporting purposes. By signing and returning this form, I certify that all of the statements above are true. ... In addition, I certify that this full-time student is unmarried. If my full-time student's status changes, I will notify my employer immediately by submitting that information, in writing, to my Personnel Assistant.

Meanwhile, the Iowa Senate Government Oversight Committee (Oversight Committee) had launched an unrelated investigation of Workforce Development based on complaints about inappropriate political influence within its organizational structure. At the time, Workforce Development was led by Director Teresa Wahlert. Wahlert, a political appointee, directly supervised all of the ALJs, who were merit-based employees rather than political appointees or at-will employees. The organizational structure also included three "lead" ALJs, who were selected from among the existing ALJs and were responsible for streamlining work flow and overseeing policy, but held no supervisory authority. Teresa Hillary and Devon Lewis held two of the three lead ALJ positions at the time. Earlier in Wahlert's tenure, Workforce Development's organizational structure included a chief ALJ, who was a merit employee and was positioned as a buffer between the political appointee director and the ALJs.

Pursuant to the Oversight Committee investigation, five Workforce Development ALJs, including Ackerman, Hillary, and Lewis, were subpoenaed during August 2014 to testify. Ackerman stated during her testimony that she believed that Wahlert's direct supervision of the ALJs permitted political interference with their judicial independence. Hillary and Lewis testified in support of Wahlert, denying that there was improper political pressure within Workforce Development.

Wahlert testified before the Oversight Committee the next day. During the hearing, a senator inquired about Hillary's appointment to one of the lead ALJ positions despite certain professionalism concerns. Wahlert responded, "[I]n fairness, Senator, if you'd like me to bring the dirt on all the judges, I'm happy to do that. I'm happy to give you what the comments are that Bonnie ... Hendricksmeyer had, that ... Marlon Mormann had, that Susan Ackerman had, that any of the judges had. It's public information." Wahlert continued:

And there are, many of [the decisions] are similar to the one, the only one you decided to read. I might also bring up that Susan Ackerman, who was over here, ... in distress, has a finding from the US Department of Labor on attitude, bias and prejudice, and forwarded to the Law Review of one of her cases eight months ago. And three months ago, again, did not pass a Department of Labor review of one of her cases, because she did not give due process to, to the people involved in the case. So, I think singling out any one judge is probably inappropriate, I think they all have bad days, just like you have bad days, and I have bad days.

The Oversight Committee's post-hearing Findings and Recommendations included a recommendation that political appointees refrain from supervising or evaluating ALJs.

Ackerman took FMLA leave from September 11, 2014, to October 22, 2014. Following Ackerman's return, Wahlert completed Ackerman's August-scheduled annual performance evaluation in November. Wahlert rated Ackerman as meeting expectations in five of eight review categories and as not meeting expectations in two. In the remaining category, which rated Ackerman's compliance with the United States Department of Labor's hearing and decision criteria, Wahlert checked both the "meets expectations" and "does not meet expectations" boxes. Wahlert then wrote, "Questionable—failed 1 case—and received either a fail or less than 90% on a second."³ When Wahlert completed the "Overall Rating" section of the evaluation form, she first marked "does not meet expectations," but then scratched out that mark and checked the "meets expectations" box. Wahlert then signed and dated the form.

Shortly after her performance evaluation, Ackerman prepared to re-enroll Catherine in the 2015 health plan. The judgment finalizing Catherine's divorce had been entered on June 2, 2014, and she had reverted to using her maiden name, Brightman. Ackerman called Human Resources Associate Heather Semke to notify her that Catherine's last name had changed because of her recent divorce and that her school records would reflect the update. According to Semke, Ackerman "reiterated several times that her daughter was unmarried because she was not living with her husband in Hawaii, and she was not receiving any support from her husband." Semke testified that Ackerman's statements "made no sense" at the time, given the apparent discrepancies between previous years’ "unmarried" insurance form certifications and Catherine's divorce date. Semke testified that following additional communications with Ackerman, she referred the matter to Jon Nelson, Workforce Development's Human Resources Supervisor. Nelson thereafter informed Iowa's Department of Administrative Services (Administrative Department) about the situation to obtain Ackerman's prior health insurance enrollment forms. An Administrative Department risk and benefits manager confirmed that Catherine had been enrolled in the plan since January 2013, stated that "any attorney would know" that being separated was not the same as being unmarried, and noted that "discipline may be in order."

Ackerman was placed on paid suspension on December 11, 2014, pending a misconduct investigation. Nelson interviewed Ackerman the next day in the presence of a union representative. Ackerman averred during the interview that had she learned from Reynolds in 2012 what Semke told her in 2014, she never would have enrolled Catherine. Ackerman maintained her original position—that when she first enrolled Catherine in the 2013 health plan she believed that Catherine was properly eligible because of her marital separation and subsequent move to Minnesota. Nelson interviewed Ackerman two additional times, with a union steward present on both occasions. Nelson also interviewed Reynolds, as well as a former Administrative Department employee with whom Reynolds had allegedly spoken in 2012 to determine Catherine's eligibility.

Workforce Development's investigation concluded that Ackerman had fraudulently filed insurance enrollment forms and had deliberately falsified Catherine's marital status. As set forth in the discharge letter signed by Bureau Division Administrator Stephen Slater, Ackerman was terminated from Workforce Development effective January 30, 2015.⁴ Workforce Development thereafter filed a complaint against Ackerman with the Iowa Supreme Court Attorney Disciplinary...