Opinion
No. 1-373 / 00-1542.
Filed January 9, 2002.
Appeal from the Iowa District Court for Polk County, MICHAEL D. HUPPERT, Judge.
The respondent appeals from the district court's ruling on judicial review reversing her award of workers' compensation benefits. REVERSED.
Pete Leehey, Matthew D. Dake Melissa M. Harbaugh-Adams of Wertz Leehey, P.C., Cedar Rapids, for appellant.
William D. Scherle and Aaron T. Oliver of Hansen, McClintock Riley, Des Moines, for appellees.
Heard by MAHAN, P.J., and HECHT, J., and HABHAB, S.J.
Senior Judge assigned by order pursuant to Iowa Code section 602.9206 (2001).
The Iowa Workers' Compensation Commissioner ruled that Sherrie McLoud sustained a mental injury in the course and scope of her employment with Fashion Bug. The district court reversed the agency decision on the ground that McLoud failed to establish legal causation. We reverse.
I. Factual Background and Proceedings. Fashion Bug is a retail clothier with a store in Fort Dodge, Iowa. In 1988, McLoud was hired as a visual merchandiser for the store. After six months in that capacity, she was promoted to second assistant manager. Three years later, McLoud was named first assistant manager. In the fall of 1996, Fashion Bug promoted Raquel Frankenreider to district manager for its Fort Dodge store. McLoud testified that Frankenreider set high sales goals that were virtually impossible to meet and made threats that changes would be made if corporate targets were not met.
In early March of 1997, Frankenreider confronted McLoud and the two other managers of the Fort Dodge store with an alleged inventory shrinkage of $18,000. Frankenreider informed the store managers that the size of the shortfall suggested internal theft. Frankenreider advised the store managers she would be coming to Fort Dodge to interrogate them about the alleged theft. Frankenreider questioned the managers individually during her next visit to the Fort Dodge store, and returned a few days later with Sharon Nelson, a Fashion Bug regional manager, to further investigate the matter.
McLoud was questioned about refund slips bearing her signature and that of a store clerk. Nelson, who claimed to be a handwriting expert, told McLoud the signatures were inconsistent. McLoud was also questioned about the number of personal telephone calls she and other staff members received while working and the procedures employed in handling the store's trash. McLoud interpreted the interrogation as an accusation that she was responsible for the unexplained disappearance of the store's inventory. McLoud testified that she cried and felt sick to her stomach during the questioning.
During the following week, several part-time employees of the store quit their jobs. McLoud's co-managers, June LaBarge and Jessica Simpson, resigned their positions, departed the store before the end of their shift on March 28, 1997, and left McLoud as the only manager in the store. Before leaving the store, LaBarge informed McLoud that a sign in the store advertising a vacant management position with the company was part of a search for her (McLoud's) replacement; and that Frankenreider had instructed LaBarge to fire McLoud. Soon after Simpson and LaBarge left the store, McLoud suffered an emotional breakdown and was taken to the hospital by her husband. Fashion Bug later discovered the apparent inventory shortage was the result of a computer error.
In her workers' compensation claim, McLoud claimed she suffered a mental injury as a result of unusual stress in the course and scope of her employment. She claimed the unusual stress resulted from a combination of (1) Frankenreider's high sales expectations and threats of consequences for Fort Dodge store managers if they failed to meet them; (2) Frankenreider's demanding, negative, and sometimes demeaning management style; (3) the belief that Frankenreider and Nelson had accused her of inventory theft; and (4) the resignation and sudden departure of the LaBarge and Simpson who left her stranded as the only remaining manager. McLoud testified she had never been placed under such stress by any other supervisor during her six and one-half years of experience as a sales person for J.C. Penney and more than eight years of experience as an employee of Fashion Bug before Frankenreider became the district manager. Simpson testified the working conditions under Frankenreider's supervision were more stressful than any she had experienced before or after working at Fashion Bug. The Workers' Compensation Commissioner's appeal decision concluded as follows:
Claimant and Simpson testified that the stresses they experienced were greater at the Fort Dodge store than in other retail stores. LaBarge's testimony seems to indicate that the stresses were not unusual. Claimant was subject to the stress of attempts to replace her, of an accusation of possible theft, of "interrogation" regarding an alleged loss of inventory, of working where several of the part-time employees had resigned, of continuing to work when her manager and the assistant manager resigned on short notice, and of being in charge when LaBarge left and Simpson abruptly left. All of these events occurred within approximately a month.
* * * *
The evidence in the record establishes that claimant's work stress was of greater magnitude than the day-to-day mental stresses workers employed in the same or similar jobs experience routinely regardless of their employer.
The commissioner held McLoud was entitled to temporary total disability benefits from March 28, 1997, until the end of the healing period.
Fashion Bug filed a petition for judicial review. The district court reversed the agency's decision on the ground that McLoud failed to prove the stress she suffered was unusual. The court bifurcated its analysis of the stress experienced by McLoud into two categories: (1) stress resulting from the nature of retail management and (2) stress caused by the Fashion Bug theft investigation. The court first found the women's fashion industry is "cutthroat" in nature and "carries with it an inherent amount of stress." After concluding the retail management stress experienced by McLoud was not unusual, the district court focused upon the facts surrounding the investigation. The court noted (1) none of the witnesses had experienced a theft investigation such as was conducted by Fashion Bug in this case and (2) no evidence was offered from other businesses or from within Fashion Bug as to whether the stress associated with such an investigation was or was not routine. The court further concluded that:
[t]he commissioner's decision amounted to nothing more than a subjective evaluation of the testimony of [McLoud] and her former co-workers that the stress created by the investigation was greater than anything they had ever experienced at work, before or after.
Finally, the court found the testimony of McLoud and her co-manager was inadequate standing alone to establish legal causation because it shed no light on what stress was "routine" in this case.
McLoud appeals from the district court's decision. She contends the court erred in its application of the law to the facts. More particularly, she argues the district court misinterpreted the rule established by our supreme court in Dunlavey v. Economy Fire Cas. Co., 526 N.W.2d 845 (Iowa 1995), by requiring her to prove the stress from the theft investigation was unusual compared to the stress experienced by other employees in such investigations. Fashion Bug contends the district court correctly concluded McLoud failed to present evidence tending to prove the stress she suffered was of greater magnitude than the day-to-day mental stresses routinely experienced by workers in the same or similar jobs.
II. Scope and Standard of Review. We review decisions of the workers' compensation commissioner under Iowa Code Chapter 17A. See Iowa Code § 86.26 (1997). Our review is for correction of errors at law. Kostelac v. Feldman's, Inc., 497 N.W.2d 853, 856 (Iowa 1993). The agency's findings have the effect of a jury verdict. Id. We review the agency's decision to determine whether it is supported by substantial evidence in the record. Id. Evidence is substantial if a reasonable mind would accept it as adequate to reach a conclusion. John Deere Dubuque Works of Deere Co. v. Weyant, 442 N.W.2d 101, 105 (Iowa 1989).
III. The Merits. Purely mental injuries, like physical injuries, may be compensable under the Iowa workers' compensation statute. Dunlavey, 526 N.W.2d at 851. Claimants alleging so-called mental/mental injuries must prove their mental injury arose out of and in the course of employment. Iowa Code section 85.3(1); Dunlavey, 526 N.W.2d at 853. In such cases, claimants must prove both medical (or factual) causation and legal causation. City of Cedar Rapids v. Board of Trustees, 572 N.W.2d 919, 922 (Iowa 1998). The medical causation issue is a fact issue requiring claimant to establish a causal connection between the injury and the employment. Dunlavey, 526 N.W.2d at 853. The legal causation issue presents a question of law: Will the policy of the law impose liability upon the employer for the type of stress experienced by the employee? Id.
In Dunlavey, our supreme court adopted an objective test for the adjudication of legal causation issues:
mental injuries caused by work related stress are compensable under Iowa Code section 85.3(1) if, after demonstrating medical causation, an employee shows that the mental injury was caused by workplace stress of greater magnitude than the day-to-day mental stresses experienced by other workers employed in the same or similar jobs, regardless of their employer.Dunlavey, 526 N.W.2d at 859. "Although evidence of workers with similar jobs employed by a different employer is relevant, evidence of the stresses of other workers employed by the same employer with the same or similar jobs will usually be most persuasive and determinative on the issue." Id. at 858.
McLoud claimed her stress arose not merely from the theft investigation, but also from other circumstances of the employment. She argued, and the Commissioner found, the theft investigation was superimposed upon other stressful circumstances of the employment including (1) Frankenreider's high sales quotas and threats of consequences if expectations were not met; (2) Frankenreider's directive to store manager LaBarge to terminate McLoud's employment; and (3) the resignation and sudden departure of two other store managers, LaBarge and Simpson.
The Commissioner properly assessed the combined stress produced by all aspects of the employment, including the theft investigation, and concluded it was unusual. The testimony of McLoud and Simpson constitutes substantial evidence supporting the Commissioner's conclusion.
The district court erred in attempting to isolate the stress produced by the competitive aspects of the retail business from the stress experienced by McLoud as a result of the theft investigation. This error led the court to conclude McLoud's claim of mental injury must fail because (1) "[n]one of the witnesses had ever been through such an investigation before" and (2) "[n]o evidence was offered from other businesses or within Fashion Bug as to whether the stress associated with such an investigation was or was not routine." Aside from our doubts about whether such bifurcation is analytically possible, we find no justification for it in the law. McLoud claimed that the combination of all stress experienced by her in her employment with Fashion Bug caused a disability. The district court erred by requiring proof that one component of that stress was unusual. Accordingly, we reverse the district court's ruling and reinstate the Commissioner's appeal decision.
REVERSED.