Grimm v. US West Communications, Inc.

• Decision Date: 08 May 2002
• Docket Number: No. 00-1275.,00-1275.
• Citation: 644 N.W.2d 8
• Parties: Kristin GRIMM, Appellant, v. US WEST COMMUNICATIONS, INC., A Colorado Corporation, and Jamie McAllister, Appellees.
• Court: Iowa Supreme Court

644 N.W.2d 8

Kristin GRIMM, Appellant, v. US WEST COMMUNICATIONS, INC., A Colorado Corporation, and Jamie McAllister, Appellees.

No. 00-1275.

Supreme Court of Iowa.

May 8, 2002.

Thomas Jackowski and Anthony F. Renzo of Babich & Renzo, P.C., Des Moines, for appellant.

Kerrie M. Plummer and Jay Chung of Gonzalez, Saggio & Harlan, West Des Moines, Tory M. Bishop and Marcia A. Rezac of Kutak Rock L.L.P., Omaha, Nebraska, and Darren E. Nadel, Denver, Colorado, for appellees. LARSON, Justice.

Kristin Grimm, who had been fired from her job with U.S. West Communications, Inc., sued U.S. West and one of its supervisors, Jamie McAllister, on various claims stemming from her discharge from the company. The district court sustained the defendants' motion to dismiss. The plaintiff appealed. Of the numerous issues raised, none are properly resolved under a motion to dismiss. We reverse and remand.

I. Facts and Prior Proceedings.

Kristin Grimm was employed by U.S. West as a directory assistance operator from June 1988 until she was discharged in March 1997. In June 1988 U.S. West had issued Grimm an employee handbook that outlined the company's policies, which stated in part:

Unlawful discrimination against an individual based on ... sexual orientation... is contrary to U.S. WEST policy and strictly prohibited.... Because laws protecting an individual's right to non-discrimination based on sexual orientation only exist on a state or local basis, the Non-Discrimination Policy of the Company with respect to sexual orientation extends to all employees, regardless of whether or not a state or local law applies.

Grimm is homosexual, and she lived with another female employee of U.S. West, a fact that was well known by her supervisor, Jamie McAllister. Grimm alleges in her petition:

12. Beginning in 1995 and continuing until Plaintiff's discharge by Defendant U.S. West on or about March 3, 1997, Plaintiff was subjected to a hostile environment in the workplace including harassment, unreasonable conditions, and discriminatory treatment based on Plaintiff's sexual orientation. This discriminatory and hostile treatment included, but was not limited to, the following:

a. Excessive and discriminatory use of availability logs;

b. Discriminatory refusal to provide adequate training;

c. Discriminatory refusal to authorize account adjustment flexibility;

d. Corporate spying by remote observation;

e. Refusal to provide adequate security for Plaintiff following a threat on her life;

f. Improper effort to deny Plaintiff earned time off to be with her sister;

g. Generally subjecting Plaintiff to unfair, petty, and unreasonable daily decisions in the workplace[.]

13. Defendant McAllister, motivated by hostility to the Plaintiff due to Plaintiff's sexual orientation and gay lifestyle, orchestrated, manipulated, and encouraged an unfair accusation of misconduct by Defendants which resulted in Plaintiff's termination on or about March 3, 1997.

14. Following Plaintiff's termination, Defendant McAllister called Plaintiff's residence on three (3) separate occasions and made misleading statements to Plaintiff about the status of her final pay check and mocked Plaintiff's unemployment status.

Grimm initially filed her lawsuit in federal district court. She alleged a federal claim under the Labor Management Relations Act LMRA § 301(a), 29 U.S.C. §185(a), contending the company breached its collective bargaining agreement (CBA) by discriminating against her. She also filed her state tort claims under the federal court's supplemental jurisdiction under 28 U.S.C. § 1367. The federal claim under the LMRA was dismissed because it was not filed within the required six-month period. Because the LMRA claim had been dismissed, the federal court dismissed Grimm's independent state-law claims without prejudice because there was no longer federal court supplemental jurisdiction of the state claims. See 28 U.S.C. § 1367(c)(3).

Following dismissal in federal court, Grimm filed her suit in Polk County based solely on the remaining independent state-law claims. The defendants removed the case to federal court, claiming all of the state claims were preempted by the LMRA. Grimm moved to remand to the state court, and the motion was granted. The federal court concluded that Grimm's state-law claims were not preempted by the LMRA, that the federal court did not have jurisdiction, and the case would be remanded to state court. That ruling was not subject to appellate review. See 28 U.S.C. § 1447(d).

The defendants moved in state court to dismiss Grimm's petition on a number of grounds, and the court granted the motion on all grounds urged.

II. Principles of Review.

All of the issues presented here were raised in the district court by a motion to dismiss under Iowa Rule of Civil Procedure 88(a)(6) ("failure to state a claim upon which any relief may be granted") (now rule 1.421(1)(f)). A court's authority to dismiss under this rule is closely circumscribed. "We uphold such a dismissal only if we can conclude that no state of facts is conceivable under which a plaintiff might show a right of recovery." Smith v. Smith, 513 N.W.2d 728, 730 (Iowa 1994). We address issues presented in a motion to dismiss based on facts apparent on the face of the petition or conceded by the plaintiff. See Gray v. Kinseth Corp., 636 N.W.2d 100, 102 (Iowa 2001)

(holding that plaintiff's concession of facts outside the petition were properly considered "to resolve the narrow legal issue [under the motion to dismiss] whether his suit is time-barred").

III. Interference With Contractual Relationship.

Grimm alleged McAllister interfered with Grimm's contractual relationship with U.S. West. The elements of this claim are (1) the plaintiff had a valid contractual relationship with U.S. West, (2) the defendant knew of that relationship, (3) the defendant intentionally interfered with that relationship, (4) the defendant's action caused U.S. West to breach its contractual relationship with the plaintiff, and (5) the amount of damages. See Water Dev. Co. v. Bd. of Water Works, 488 N.W.2d 158, 161 (Iowa 1992)

.

The problem for the plaintiff in this case is that McAllister is a supervisory employee of U.S. West, one of the parties to the employment contract. We have held such employees cannot be held liable for tortious interference with the employment contract. See Harbit v. Voss Petroleum, Inc., 553 N.W.2d 329, 331 (Iowa 1996)

(action for tortious interference, based on alleged retaliation for reporting sexual harassment, could not be maintained if all defendants were either plaintiff's employers or the employer's agents); Klooster v. N. Iowa State Bank, 404 N.W.2d 564 (Iowa 1987) (action related to existing contracts between the parties and no third parties were involved, therefore no claim of tortious interference). This is so because ordinarily when both parties are parties to a contract the proper remedy is a suit for breach of contract. Tyler v. Percell, 506 N.W.2d 805, 808 (Iowa Ct.App.1993) (citing K & K Management, Inc. v. Lee, 316 Md. 137, 557 A.2d 965, 974 (1989)).

Grimm cites Hunter v. Board of Trustees, 481 N.W.2d 510 (Iowa 1992), to support her argument that, in situations such as this, supervisors may be held liable for interference with a contract. Although Grimm's argument is not clearly illuminated, Hunter recognized a cause of action for tortious interference with an employment contract when a supervisor discharges another employee in violation of the employment contract, and the discharge is found to exceed the qualified privilege to which the supervisor is entitled as an officer or director. Id. at 518. This court has also found that, in the absence of evidence of bad faith, fraud, or improper means, there is no cause of action against an agent for breach of contract by a corporation. Bossuyt v. Osage Farmers Nat'l Bank, 360 N.W.2d 769, 778 (Iowa 1985); see also 45 Am.Jur.2d. Interference § 6, at 277 (1999) ("[A] corporation's officer or director generally cannot be held liable under a theory of tortious interference for causing the corporation to breach a contract, nor can an agent be held liable for inducing his principal to breach a contract so long as he is acting within the scope of his authority."). Because Grimm alleges McAllister's actions were malicious, wanton, and pursued for an improper purpose, her claim may fall within the beyond-the-scope-of-the-agency exception to the rule that parties to a contract cannot tortiously interfere with that contract. These allegations are sufficient to survive a motion to dismiss because they allege McAllister was acting outside the scope of her agency, and thus in effect removed herself from the contract.

IV. The Federal Preemption Issue.

Section 301 preempts state claims "founded directly on rights created by collective-bargaining agreements, and also claims `substantially dependent on analysis of a collective-bargaining agreement.'" Caterpillar, Inc. v. Williams, 482 U.S. 386, 394, 107 S.Ct. 2425, 2431, 96 L.Ed.2d 318, 328 (1987) (quoting Int'l Bhd. of Elec. Workers v. Hechler, 481 U.S. 851, 859 n. 3, 107 S.Ct. 2161, 2167 n. 3, 95 L.Ed.2d 791, 801 n. 3 (1987)).

A. The contract claim. US West contends that the plaintiff's suit is preempted, even though it is not based directly on the CBA, because the scope of the CBA's "zipper" clause must be consulted to determine if a separate action may be maintained.

A zipper clause "seeks to close out bargaining during the contract term and to make the written contract the exclusive statement of the parties['] rights and obligations." The parties to a written contract typically want the writing to be the exclusive statement of what they have agreed to. A zipper clause conveys the message that this agreement contains the complete understanding of the parties. It zips up and closes their negotiations and announces there is no more to bargain about until next time.

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