Sims v. Nci Holding Corp.

• Decision Date: 09 January 2009
• Docket Number: No. 07-1468.,07-1468.
• Citation: 759 N.W.2d 333
• Parties: Jerrie Laverne SIMS, Appellant, v. NCI HOLDING CORPORATION, et al., Appellee.
• Court: Iowa Supreme Court

759 N.W.2d 333

Jerrie Laverne SIMS, Appellant, v. NCI HOLDING CORPORATION, et al., Appellee.

No. 07-1468.

Supreme Court of Iowa.

January 9, 2009.

Steven Gardner of Kiple, Denefe, Beaver, Gardner & Zingg, L.L.P., Ottumwa, for appellant.

Sean M. Becker of Vinson & Elkins, L.L.P., Houston, Texas, and Gene R. La Suer of Davis, Brown, Koehn, Shors & Roberts, P.C., Des Moines, for appellee.

HECHT, Justice.

An employee was discharged from employment after his urine sample tested positive for an illegal drug. The employer provided the employee with oral notice of his right to a confirmatory retest of the sample. The employee subsequently filed this action alleging the employer violated Iowa's "drug-free workplaces" statute by failing to give written notice of his right to request a confirmatory test. The district court found the employer substantially complied with the statute by providing written notice six months after the termination, but entered judgment in the employee's favor for attorney fees and costs. Although we reject the district court's finding of substantial compliance with the statutory written notice requirement, we nonetheless agree with and therefore affirm that court's denial of legal and equitable relief for wrongful discharge under the circumstances of this case. As the employer failed to substantially comply with the notice requirement, however, we affirm the judgment against the employer for attorney fees and costs.

I. Factual and Procedural Background.

Jerrie Sims worked as an Operator at the American Building Components manufacturing facility in Oskaloosa between July 2005 and March of 2006. American Building Components is a division of the NCI Holding Corporation. Sims's position required him to oversee the operation of steel decoiling machines, program the computers controlling them, and operate a forklift in transporting bundles of steel weighing approximately 10,000 pounds. The district court found Sims was employed in a "safety sensitive position." See Iowa Code § 730.5(1)(j) (2005) (defining a "safety sensitive position" as "a job wherein an accident could cause loss of human life, serious bodily injury, or significant property or environmental damage ...").

When Sims was hired by American Building Components, he was provided with and acknowledged receipt of the company's employee manual. The manual contained NCI's "Drugs, Narcotics, and Alcohol" policy prohibiting employees from being present on company property while under the influence of alcohol or illegal drugs. The policy informed employees that the company would randomly administer drug tests, and that a positive test result would subject an employee to an array of potential sanctions including immediate termination.

Sims was randomly selected for a drug test administered for NCI by Houston Medical Testing Services, a professional third-party administrator. He was taken to a medical center where a sample of his urine was collected for drug screening on February 22, 2006. The sample was sent by courier to Medtox Laboratories for screening. The collection and testing of the specimen were entirely consistent with the requirements prescribed in Iowa Code section 730.5.

Sims's sample tested positive for amphetamines and methamphetamine, a result which was confirmed by gas chromatography with mass spectrometry. Medtox Laboratories sent the test results to Houston Medical Testing Services where they were reviewed by Dr. Jeffrey Britton. Dr. Britton, a certified medical review officer, concluded Sims was likely under the influence of illegal methamphetamine at the time of the test. Dr. Britton then contacted Sims and allowed him an opportunity to explain the positive test result. Sims reported he had visited a dentist on the day before the test, but Dr. Britton opined this history was unlikely to have produced a positive test result.

Dr. Britton reported the positive test result to Nancy Pitcock, a representative in NCI's human resources department. Pitcock informed Sims's supervisor of the positive test results on March 16, 2006, and instructed the supervisor to inform Sims. When Sims contacted Pitcock later that day, she again informed Sims of the positive test results and orally informed him of his right to undertake a confirmatory test at his own expense.¹ Sims rejected the prospect of a confirmatory test, claiming he did not have adequate financial resources to pay for such a test. NCI terminated Sims's employment on March 16, 2006.

Sims filed suit against NCI on April 13, 2006, claiming the company violated Iowa Code section 730.5 by failing to notify him in writing by certified mail, return receipt requested, of (1) the results of the test, (2) his right to request and obtain a confirmatory test at an approved laboratory of his choice, and (3) the fee payable by him for a confirmatory test. Sims also claimed NCI's "Drug, Alcohol, and Narcotics" policy failed to make disclosures required by Iowa Code section 730.5(9)(a)(1). Sims sought a declaration that NCI violated section 730.5, injunctive relief, compensatory damages including back pay, punitive damages, and an award of attorney fees.

NCI sent Sims's attorney a letter by certified mail, return receipt requested, on August 18, 2006 informing Sims of his right to a confirmatory test. The letter also advised Sims of NCI's unconditional offer to pay for such a test. Sims accepted NCI's offer and requested the test be conducted by Laboratory Corporation of America. This test confirmed the previous positive test results.

The parties submitted the case to the district court on stipulated facts. In its ruling on the merits, the court observed "it is unclear from the statute whether a six-month delay in providing notice is compliance." Noting "common sense would tell one that notice should be sent to the employee within a few days of the employer obtaining the results of the test," the court nonetheless found the delay caused Sims no direct damage. The court concluded NCI's written drug policy was noncompliant with Iowa Code section 730.5(9) because it failed to disclose Sims's right to request and obtain a confirmatory test. However, because NCI ultimately provided Sims the opportunity for a retest which confirmed the previous positive result, the district court found "NCI substantially complied with the statute by what they did, not by what their policy said or did not say." Despite NCI's delay in giving written notice of Sims's right to retest, the court found Sims was orally advised of this right on March 16, 2006 and later advised in writing as well.

The district court did not award Sims back pay or reinstatement as he was found to have suffered no direct harm as a result of his termination. The court did, however, order NCI to pay Sims's attorney fees and the costs of the action because Sims brought the action "as a direct result of NCI's failure to comply with the plain language of [section 730.5]." See Iowa Code § 730.5(15)(a) (authorizing the court to impose "any other equitable relief as the court deems appropriate including attorney fees and court costs").

Sims appeals, contending the district court erred in (1) finding NCI substantially complied with Iowa Code section 730.5, and (2) failing to grant the requested legal and equitable relief for wrongful termination. NCI cross-appeals, challenging the court's ruling ordering NCI to pay Sims's attorney fees and the court costs.

II. Scope of Review.

We review the district court's legal conclusions for correction of errors at law and affirm its findings of fact if they are supported by substantial evidence. Iowa Rs.App. P. 6.4, 6.14(6)(a); Tow v. Truck Country of Iowa, 695 N.W.2d 36, 38 (Iowa 2005). Evidence is substantial if a reasonable mind would accept the evidence as adequate to reach the same findings. Frontier Props. Corp. v. Swanberg, 488 N.W.2d 146, 147 (Iowa 1992).

III. Discussion.

A. Substantial Compliance. We have not previously determined whether strict compliance with the notice provisions of section 730.5, the "drug-free workplaces" statute, is required or whether substantial compliance will suffice. See Harrison v. Employment Appeal Bd., 659 N.W.2d 581, 586 (Iowa 2003); see also Munn v. Kraft Foods Global, Inc., 455 F.Supp.2d 925, 933 (S.D.Iowa 2006) (noting the decision in Harrison did not resolve the question of whether strict or substantial compliance was required).

"Substantial compliance is said to be compliance in respect to essential matters necessary to assure the reasonable objectives of the statute." Superior/Ideal, Inc. v. Bd. of Review, 419 N.W.2d 405, 407 (Iowa 1988). In the broadest sense, section 730.5 is intended to protect an employer's right to ensure a drug-free workplace. Anderson v. Warren Distrib. Co., 469 N.W.2d 687, 689 (Iowa 1991) (noting employers should be allowed to take steps to ensure a drug-free workplace). Viewed more narrowly, the legislature's intent was to "ensure the accuracy of any drug test serving as the basis for adverse employment action." Harrison, 659 N.W.2d at 586-87. Accurate drug testing inures, of course, to the benefit of both employers and their employees. Id. at 587.

The notice requirement within the statute focuses more directly, however, on the protection of employees who are required to submit to drug testing. Id. Section 730.5(7)(i)(1) accomplishes this protective purpose by mandating written notice by certified mail of (1) any positive drug test, (2) the employee's right to obtain a confirmatory test, and (3) the fee payable by the employee to the employer for reimbursement of the expense of the test. Iowa Code § 730.5(7)(i)(1). Such a formal notice conveys to the addressee "a message that the contents of the document are important" and worthy of the employee's deliberate reflection. Harrison, 659 N.W.2d at 587. We now decide that if the employer's actions fall short of strict compliance, but nonetheless accomplish the important...