UPDATES & ANALYSIS

The Iowa Civil Rights Act doesn’t reach beyond the state’s borders, Iowa Supreme Court rules

by Rox Laird | May 21, 2018

An Iowan working for Deere & Co. in China cannot sue for employment discrimination because the Iowa Civil Rights Act does not reach beyond the borders of Iowa, the Iowa Supreme Court ruled May 18.

Matthew Jahnke was brought back to Iowa from his China assignment and demoted following an internal investigation that found his sexual relationships with two Chinese women under his span of control violated Deere’s code of conduct. Jahnke sued under the Iowa Civil Rights Act for disparate treatment arguing he was treated differently because of his age – 60 at the time of the demotion – and the fact that he is a Caucasian male while the two younger Chinese women were not similarly disciplined.

The Court, in a 5-0 decision written by Justice Bruce Zager joined by Chief Justice Mark Cady and Justices Brent Appel, David Wiggins and Thomas Waterman, rejected Jahnke’s arguments. The Court held that the Iowa Civil Rights Act does not apply extraterritorially; nor can Jahnke bring a claim under the Iowa statute because neither he nor Deere & Co. was located in Iowa for purposes of the alleged discriminatory act.

Justices Daryl Hecht and Edward Mansfield did not participate in the decision.

Jahnke, a Deere employee since 1998 last assigned to its Ankeny plant, was sent to China in 2011 as a project manager in Harbin, China, overseeing construction of a new plant and later as factory manager once production began.

In 2014 Deere officials based in China began an investigation into Jahnke’s relationships with the two Chinese women, one a financial controller assigned to assist him, and the other a contract employee hired as a language tutor. Following the investigation, Jahnke was removed from his position in China, demoted and reassigned to the company’s factory in Waterloo at a reduced salary grade.

The justices concluded that Jahnke does not have a disparate-action claim under the Iowa Civil Rights Act because, under its prior rulings, the Court presumes that a statute “lacks extraterritorial reach unless the Legislature clearly expresses otherwise.” Nothing in the Iowa Civil Rights Act expressly states or indicates that it applies outside of Iowa’s or the nation’s boundaries, the Court said.

When the Legislature intends that a statute operate extraterritorially, it has said so, as it did, for example, by extending the workers’ compensation law and the Tort Claims Act beyond the borders of Iowa, Zager wrote.

“It is telling that the Legislature has clearly indicated its intention for other Iowa statutes to apply extraterritorially by including specific language expressing this intent, yet declined to include comparable language in the ICRA,” Zager wrote. “The Iowa Legislature is aware of our presumption against extraterritoriality and has made this awareness clear in other Iowa statutes. Consequently, if the Iowa Legislature wanted the ICRA to apply extraterritorially, it would have expressly indicated this intent in the statutory text. Yet, the Iowa Legislature did not do so, and it is not for us to alter the ICRA by expanding it to apply extraterritorially.”

Moreover, the Court said applying the Iowa Civil Rights Act outside Iowa creates potential conflicts with the laws of other states and countries, and Iowa should respect the sovereignty of other states rather than impose its policy decision on the employment practices of those states. Because of such concerns for interstate harmony, Zager wrote, a majority of U.S. courts have declined to apply human-rights statutes beyond their own jurisdictions.

Jahnke argued that the Iowa Civil Rights Act nonetheless applies in his case because he is an Iowan who was working on a temporary assignment overseas, and the illegal discrimination he alleged was based on decisions made in Iowa by Iowans. The Court rejected that line of argument, as well, because all of the actions Jahnke cited occurred in either China or Illinois.

At the time of the alleged discrimination, Jahnke lived and worked in China for a Deere subsidiary that operated under the laws of that country. The investigation and recommendation that led to his disciplinary demotion and return to the U.S. was conducted by Deere employees in China and approved and carried out by Deere management based in Moline, Ill.

“Jahnke’s petition does not support his claim that Iowa, or more specifically Polk County, is the proper venue for his employment discrimination claim,” Zager wrote. “Iowa is not the principal place of business for Deere. The only connection with Polk County was that John Deere Des Moines Works was the last place that Jahnke worked prior to his expatriation to China. ”

This is not to say Jahnke had nowhere else to turn. He could have brought a federal employment-discrimination claim under Title VII and the Age Discrimination in Employment Act, Zager wrote, or he may have had a claim under the Illinois Human Rights Act, or the laws of China. But not the Iowa Civil Rights Act.

[Disclaimer: Deere & Co. was represented in this case by Nyemaster Goode attorneys Frank Harty and Debra Hulett.]

Tags: Iowa Civil Rights Act, Iowa Supreme Court, Iowa Supreme Court 2017-18