Dix v. Casey's Gen. Stores, Inc.

• Citation: 961 N.W.2d 671
• Decision Date: 25 June 2021
• Docket Number: No. 18-1464,18-1464
• Court: United States State Supreme Court of Iowa
• Parties: Tyler DIX, Jason Cattell, Jimmy McCann, and Julie Eller, Appellees, v. CASEY'S GENERAL STORES, INC. and Casey's Marketing Company, Appellants.

961 N.W.2d 671

Tyler DIX, Jason Cattell, Jimmy McCann, and Julie Eller, Appellees,

v.CASEY'S GENERAL STORES, INC. and Casey's Marketing Company, Appellants.

No. 18-1464

Supreme Court of Iowa.

Submitted October 14, 2020

Filed June 25, 2021

Rebecca Reif (argued) and Lindsay A. Vaught of Ahlers & Cooney, P.C., Des Moines; Ann H. Kendell and Amanda G. Jansen (until withdrawal), of Brown, Winick, Graves, Gross, Baskerville and Schoenebaum, P.L.C., Des Moines, for appellants.

David R. Albrecht (argued) and Amy R. Beck of Fiedler Law Firm, PLC, Johnston, and Matthew M. Sahag of Dickey & Campbell Law Firm, PLC, Des Moines, for appellees.

Leslie C. Behaunek of Nyemaster Goode, P.C., Des Moines, for amicus curiae Iowa Association of Business and Industry.

Oxley, J., delivered the opinion of the court, in which Appel, Waterman, and Mansfield, JJ., joined. McDermott, J., filed an opinion concurring in part and dissenting in part, in which Christensen, C.J., and McDonald, J., joined.

OXLEY, Justice.

Workplace drug testing is a controversial topic that pits an employer's right to a drug-free workplace against the privacy interests of its employees. Prior to 1998, private employers were statutorily precluded from testing employees without a sufficient reason for doing so. The Iowa general assembly revamped its drug-testing statute to allow suspicionless drug testing, putting in place specific requirements for carrying out an unannounced testing program. Private employers who choose to engage in workplace drug testing must comply with the detailed and comprehensive statutory scheme or face civil liability.

After Casey's amended its drug-testing policy to allow for unannounced random drug testing, its first testing endeavor ran into some snags. Three employees who tested positive and were terminated and another who failed to provide an adequate sample and was deemed to have resigned brought an action under the civil remedies provision of Iowa Code section 730.5 challenging a number of areas where they claim Casey's failed to follow statutory requirements.

This case raises significant issues under Iowa's private employer drug-testing statute, including when an employer is entitled to immunity, what it takes to comply with the statutory requirements, the meaning of "safety-sensitive positions," and the process for selecting employees for testing, among others. We affirm the district court's conclusion that two employees were improperly classified as engaged in safety-sensitive positions, so they should never have been tested and were entitled to the relief the court granted. The other two employees were not aggrieved by Casey's actions in attempting to comply with the statutory requirements, so we also affirm the district court's judgment as to those employees.

I. Factual Background and Proceedings.

Julie Eller, Jimmy McCann, Jason Cattell, and Tyler Dix were employed by Casey's Marketing Company¹ and Casey's General Stores (collectively "Casey's") in its Ankeny headquarter distribution warehouse. Eller and McCann had each suffered workplace injuries resulting in medical restrictions, so they worked on light duty, sorting cigarette returns. Employees assigned to light duty worked within "the cage," a chain-link structure that surrounded them on all sides within the warehouse area of the facility. Dix and Cattell worked on heavy duty, operating forklifts and lifting heavy objects.

In early 2016, Casey's amended its Drug and Alcohol Testing Policy to add unannounced random testing of employees in a pool of safety-sensitive positions to its current policy. The district court found Casey's implemented the suspicionless drug-testing program based, at least in part, on concerns of suspected widespread drug use among warehouse employees. On January 26, 2016, Casey's disseminated the new policy to its employees located in the Service Warehouse, the Distribution Center Warehouse, and the Vehicle Maintenance Departments, including the employees involved in this case. All four employees signed the new policy, acknowledging they read and understood it.

The new policy adopted much of the language of Iowa Code section 730.5, including its definition of a "safety-sensitive position." Casey's treated all four employees as being in safety-sensitive positions on the basis that all employees working in a warehouse setting, regardless of their specific job description, held such positions.

Casey's arranged for its first drug testing under the new policy with an outside vendor, ARCpoint Labs. On April 5, Casey's provided a list of 184 employees who were scheduled to work on April 6 between 10:00 a.m. and 2:00 p.m. to ARCpoint Labs and requested it randomly select 90% of those employees for testing. Casey's agreed to ARCpoint's suggestion that the unselected employees be placed into a pool of alternates. This resulted in 167 employees selected for testing and 17 employees selected as alternates. All four plaintiffs were on the initial randomly-selected list for testing.

The drug test took place the next day, April 6, and was administered by two Casey's employees trained to do so, though other employees without training assisted. As it turned out, every employee from the list of scheduled employees who showed up to work was tested, including all alternates, except two employees who were on the original list but overlooked due to an apparent oversight.

On the day of the test, Casey's vice president Jay Blair gathered the employees in the warehouse and announced the test. He advised them not to discuss with Casey's any prescription drugs they were taking. He further told the employees they could decline to provide a urine sample but Casey's would regard refusal to provide a sample as a resignation. Casey's did not provide a list of the drugs to be tested at this time.

Casey's used the warehouse locker rooms to gather urine samples. Employees were sent to the locker rooms in pairs, where they used the restroom stalls to provide their samples. McCann, Cattell, and Dix all provided samples. None of them testified anyone specifically invaded their privacy when they provided the samples, but there were gaps between the bathroom stalls that could be seen through, and the sides of the stalls were short enough to be seen over. All three samples tested positive: marijuana for Dix and marijuana and amphetamines for Cattell and McCann. All three employees were subsequently fired.

Eller attempted to provide a sample but did not produce a large enough urine sample. She tried again an hour later but again did not produce a large enough sample. At this time, she left, since her shift had already ended and she had other plans. Under Casey's policy, Eller's departure constituted a refusal to take the test, and she was deemed to have voluntarily resigned.

All four employees brought actions against Casey's alleging various violations of Iowa Code section 730.5. The district court consolidated their cases and held a bench trial. Concluding that substantial compliance rather than strict compliance was the proper standard for assessing compliance with section 730.5, the district court found Casey's complied with the statute except for three specific violations: Eller and McCann should not have been included in the pool of employees subject to testing because they did not hold "safety-sensitive positions," Casey's failed to provide employees an opportunity to present information relevant to the drug test, and Casey's failed to provide the list of drugs to be tested on the day of the test.

The court found Eller and McCann were fired as a result of Casey's statutory violation and awarded them damages, rejecting Casey's argument they each failed to mitigate damages. The court denied all of Cattell's and Dix's claims for relief because the founded violations did not cause their terminations.

Casey's appealed the district court's order as to Eller and McCann, and Cattell and Dix cross-appealed the district court's denial of relief. We transferred the appeal to the court of appeals, which upheld the district court's ultimate ruling. Casey's, Dix, and Cattell sought further review, which brings us here.

II. Standard of Review.

The parties disagree about the correct standard of review. Casey's argues the standard of review is de novo. The employees argue the standard of review is for errors at law, citing Sims v. NCI Holding Corp. , 759 N.W.2d 333, 337 (Iowa 2009) (reviewing for errors of law in a section 730.5 case).

"[O]ur review of a decision by the district court following a bench trial depends upon the manner in which the case was tried to the court." Carroll Airport Comm'n v. Danner , 927 N.W.2d 635, 642 (Iowa 2019) (quoting Collins Tr. v. Allamakee Cnty. Bd. of Supervisors , 599 N.W.2d 460, 463 (Iowa 1999) ). Where the case was "tried at law, our review is for correction of errors at law." Id. If the case was tried in equity, our review is de novo. Id. ; see also Longfellow v. Sayler , 737 N.W.2d 148, 152 (Iowa 2007) ("The standard of review on appeal is not governed by how the clerk docketed the case, but rather by how the parties tried the case in the district court.").

"To determine a proceeding as legal or equitable, we look to the pleadings, relief sought, and nature of the case." Hedlund v. State , 930 N.W.2d 707, 718 (Iowa 2019) (considering the whistleblower statute in Iowa Code section 70A.28 ). The parties sought back pay and front pay under section 730.5, which is limited to equitable relief, see Iowa Code § 730.5(15)(a )(1) (2016) (authorizing "affirmative relief including reinstatement or hiring, with or without back pay, or any other equitable relief as the court deems appropriate"), indicating the case was tried in equity, see Hedlund , 930 N.W.2d at 718 (reviewing case in equity based on availability of similar relief under Iowa Code section 70A.28(5)(a ) ).

While ruling on evidentiary objections at trial is a "hallmark of a law trial," Passehl Est. v. Passehl , 712 N.W.2d 408,...