Tyson Foods, Inc. v. Hedlund

• Decision Date: 12 October 2007
• Docket Number: No. 05-2127.,05-2127.
• Parties: TYSON FOODS, INC., Appellant, v. Migdalia HEDLUND, Appellee.
• Court: Iowa Supreme Court

740 N.W.2d 192

TYSON FOODS, INC., Appellant, v. Migdalia HEDLUND, Appellee.

No. 05-2127.

Supreme Court of Iowa.

October 12, 2007.

Coreen K. Sweeney and Scott A. Sundstrom of Nyemaster, Goode, West, Hansell & O'Brien, P.C., Des Moines, for appellant.

Randall P. Schueller of Hopkins & Huebner, P.C., Des Moines, for appellee.

CADY, Justice.

In this appeal we must decide whether an employer may contest liability for an injury to its employee after admitting liability for the injury at a previous alternate medical care hearing. The workers' compensation commissioner determined the employer was unable to deny liability based on the doctrine of issue preclusion. The district court affirmed. The court of appeals also affirmed, but held the liability issue was not res judicata. Instead, the court of appeals applied the doctrine of judicial estoppel and held the employer was estopped from contesting liability. On further review, we vacate the decision of the court of appeals, reverse the judgment of the district court, and remand to the commissioner for further proceedings.

I. Background Facts and Proceedings.

Migdalia Hedlund (Hedlund) was employed by Tyson Foods, Inc. (Tyson Foods). On January 10, 2005, Hedlund filed a workers' compensation claim asserting she sustained a work-related injury to her bilateral hands, wrists, elbows, arms, right shoulder, and neck on February 1, 2004.

Hedlund's treating physician was Dr. Timothy Schurman. On November 8, 2004, Dr. Schurman diagnosed Hedlund with "underlying inflammatory problems, possibly rheumatoid arthritis." Dr. Schurman also recommended Hedlund be seen by a rheumatologist.

On January 4, 2005, Tyson Foods submitted a series of written questions to Dr. Schurman. Tyson Foods asked:

1. "Are you able to state within a reasonable degree of medical certainty that the diagnosis of rheumatoid arthritis was caused by her work activities at Tyson Foods, Inc.?"

2. "Your 11/08/04 note indicates `possible RA aggravated by the work place'. Did the aggravation physically change the underlying condition?"

3. "Will further treatment be indicated for any work caused injury?"

Dr. Schurman responded in the negative to all three questions.

On February 11, 2005, Dr. Schurman diagnosed Hedlund with "underlying inflammatory arthritis, which has been materially aggravated by the work place." In a February 18, 2005 letter, Dr. Schurman indicated Hedlund's condition was aggravated by her work at Tyson Foods.

Tyson Foods considered Dr. Schurman's opinions to be conflicting and requested an independent medical examination of Hedlund as allowed by Iowa Code section 85.39.¹ An appointment with Dr. Delwin Quenzer was scheduled for this purpose. Hedlund, however, believed the appointment with Dr. Quenzer was an attempt to change her treating physician.

As a result, Hedlund filed a petition with the workers' compensation commissioner for alternate medical care on April 14, 2005 (April petition). At the hearing on the April petition, Tyson Foods clarified that the appointment with Dr. Quenzer was only for the purpose of an Iowa Code section 85.39 independent medical evaluation. Consequently, a deputy commissioner dismissed the petition. In a written dismissal order, the deputy found, "[a]s a result of claimant setting forth that the basis for the application for alternate medical care no longer exists, there is, therefore, no issue to be resolved." The deputy commissioner also indicated in the order that, "[d]uring the course of the [April alternate medical care] hearing, [Tyson Foods] was asked whether liability was accepted on this claim and the attorney for [Tyson Foods] stated it was."

Tyson Foods was subsequently not able to reschedule the independent medical examination with Dr. Quenzer and was unable to retain a rheumatologist willing to see Hedlund. Instead, Tyson Foods scheduled the independent medical examination with Dr. Donna Bahls.

On June 6, 2005, Hedlund filed a second petition for alternate medical care (June petition). Hedlund claimed Tyson Foods refused to provide her with the care of a rheumatologist. Tyson Foods filed an answer to the petition, but did not indicate it disputed liability of the claim.

On June 13, 2005, Tyson Foods received the results of Dr. Bahls' independent medical examination of Hedlund. Based on those results, Tyson Foods filed an amended answer to the second petition for alternate medical care, indicating it was disputing liability.

On June 21, 2005, a deputy workers' compensation commissioner held a hearing on the second petition for alternate care. Tyson Foods sought to amend its answer to specifically deny liability based on new medical information obtained from Dr. Bahls. The deputy commissioner determined Tyson Foods was precluded under the doctrine of res judicata from contesting liability for the injury after it admitted liability in the first alternate medical care proceeding. Pursuant to a delegation of authority by the workers' compensation commissioner, the deputy commissioner's decision constituted final agency action.² Consequently, Tyson Foods filed a petition for judicial review with the district court. On December 6, 2005, the district court likewise found the issue of liability to be res judicata.

Tyson Foods appealed, and we transferred the case to the court of appeals. The court of appeals held the doctrine of issue preclusion did not apply because the issue was not actually raised and litigated in the first alternate medical care proceeding. However, it concluded Tyson Foods was judicially estopped from denying liability for Hedlund's injury after it had conceded the issue at the April alternate-care hearing.

II. Standard of Review.

"We apply the standards of Iowa Code section 17A.19 in our review of workers' compensation decisions." R.R. Donnelly & Sons v. Barnett, 670 N.W.2d 190, 195 (Iowa 2003). "On our review of the district court's decision, we apply the standards of chapter 17A to determine if our conclusions are the same as those of the district court. If so, we affirm; otherwise, we reverse or otherwise modify." Winnebago Indus., Inc. v. Haverly, 727 N.W.2d 567, 571 (Iowa 2006) (citing Hill v. Fleetguard, 705 N.W.2d 665, 669 (Iowa 2005)).

In this case, the district court relied on the doctrine of res judicata, as did the deputy commissioner, to support its conclusion that Tyson Foods was precluded from contesting liability. The court of appeals affirmed, but relied on the doctrine of judicial estoppel. As an "equitable doctrine invoked by a court at its discretion,"³ the appropriate standard of appellate review would normally be for an abuse of discretion.⁴ However, on further review from a decision of the court of appeals, we nevertheless review the decision of the district court. Therefore, we review, as did the court of appeals, for corrections of errors at law. IBP, Inc. v. Harpole, 621 N.W.2d 410, 414 (Iowa 2001).

III. Issue Preclusion.

We first consider whether the district court correctly applied the doctrine of res judicata or issue preclusion. One important element of issue preclusion is that the issue to be precluded must have been "raised and litigated" in the previous proceeding. Haverly, 727 N.W.2d at 572. Because the liability issue was admitted in the first proceeding, the issue was not actually raised and litigated. Id. Consequently, the district court erred by holding that Tyson Foods was precluded from contesting liability based on issue preclusion.

IV. Judicial Estoppel.

A. General Principles. We next consider whether the decision of the district court can be upheld under the doctrine of judicial estoppel. Although this theory was not raised or argued before the district court, we have previously stated: "[B]ecause judicial estoppel is intended to protect the integrity of the fact-finding process by administrative agencies and courts, the issue may properly be raised by courts, even at the appellate stage, on their own motion." Id. at 573.

We first engaged in a comprehensive discussion of the doctrine of judicial estoppel in Vennerberg Farms, Inc. v. IGF Insurance Co., 405 N.W.2d 810 (Iowa 1987). Id. at 814 (observing that "[t]he rule has been sparingly applied in other jurisdictions and only alluded to in our own"). There, we observed that judicial estoppel is a "commonsense doctrine" that "prohibits a party who has successfully and unequivocally asserted a position in one proceeding from asserting an inconsistent position in a subsequent proceeding." Id. Moreover, it is "designed to protect the integrity of the judicial process." Id. It applies to administrative proceedings as well as court proceedings. Haverly, 727 N.W.2d at 573-74. The doctrine

addresses the incongruity of allowing a party to assert a position in one tribunal and the opposite in another, thereby creating the perception that at least one court has been misled.

Vennerberg Farms, 405 N.W.2d at 814. Yet, as the United States Supreme Court has observed, "`[t]he circumstances under which judicial estoppel may appropriately be invoked are probably not reducible to any general formulation of principle.'" New Hampshire, 532 U.S. at 750, 121 S.Ct. at 1815, 149 L.Ed.2d at 978 (quoting Allen v. Zurich Ins. Co., 667 F.2d 1162, 1166 (4th Cir.1982)). We have likewise been flexible in our past application of the doctrine and view its flexible parameters as a strength in its ability to achieve its goal.⁵

Nonetheless, we have often affirmed

[a] fundamental feature of the doctrine is the successful assertion of the inconsistent position in a prior action. Absent judicial acceptance of the inconsistent position, application of the rule is unwarranted because no risk of inconsistent, misleading results exists.

Vennerberg Farms, 405 N.W.2d at 814; accord Haverly, 727 N.W.2d at 573; Wilson, 666 N.W.2d at 166; Jacobs, 607 N.W.2d at 687; Roach, 524 N.W.2d at 403; Graber, 410 N.W.2d at 228. The judicial-acceptance component of...