UPDATES & ANALYSIS

Former employee’s common law negligence claims were preempted by the Iowa Workers’ Compensation Act, the Iowa Supreme Court rules

by Ami Penquite | June 23, 2023

In 2017, Jena McCoy was hired as a sales representative for Thomas L Cardella & Associates’ call center in Ottumwa, Iowa. She alleged that within her first few weeks on the job, her supervisor, John Thompson, “began sitting next to her in her cubicle, touching her inappropriately and making sexually charged comments.” McCoy repeatedly rebuked Thompson’s unwanted advances and reported his conduct to the center’s recruiter, but Thompson remained her team supervisor. McCoy also received inappropriate sexual comments from another employee, Mitch Turner, who she alleged made her feel unsafe at night when she walked to her car. McCoy alleged that she reported this behavior to her employer, who denied that McCoy made any reports before quitting her position.

On May 8, 2019, McCoy filed suit against Cardella asserting claims for negligent hiring, supervision, and retention of Thompson and Turner. She sought damages for lost wages and benefits, emotional distress and mental anguish, and harm to her reputation. In response to a motion to dismiss, McCoy argued that her negligence arose from conduct amounting to assault and battery—in other words, she was not asserting a hostile-work-environment claim that would have arisen under the Iowa Civil Rights Act (ICRA). (Any ICRA claims would have been time-barred.)

Following a trial, a jury concluded Turner did not commit assault, Thompson committed assault and battery, and “Cardella was negligent in hiring, supervising, or retaining both Thompson and Turner.” McCoy was awarded $400,000 for past and future emotional distress.

On appeal, Cardella asserted that McCoy’s claims were preempted by the Iowa Workers’ Compensation Act (IWCA). In McCoy v. Thomas L. Cardella & Associates, filed on June 16, 2023, the Iowa Supreme Court agreed with Cardella. Justice Dana Oxley, writing for a unanimous Court, held that McCoy’s negligent supervision claim fell within the IWCA and was preempted.

First, Justice Oxley noted the Court has “never affirmatively recognized a viable negligent supervision claim in favor of a plaintiff suing her own employer based on the wrongful conduct of a coemployee.” Some federal courts have recognized such a common law claim, but others found such claims to be preempted by the ICWA. The IWCA contains an exclusivity provision that preempts common law claims that overlap with claims under the IWCA. The exclusivity provision applies to intentional torts in the workplace and negligent supervision and retention by an employer. For the exclusivity provision to apply the employee’s injury must “arise out of and in the course of employment,” requiring a causal connection between the injury and employment.

Applying the IWCA to this case, Justice Oxley determined McCoy’s common law claim was preempted as her injuries arose out of and in the course of her employment and the claimed damages fell within workers’ compensation law.

To determine if the claimed damages fall within the IWCA, the Court evaluates the plaintiff’s claimed damages to determine if the essence of the tort is non-physical or physical (including mental or nervous injuries that cause disability). Using this test, Justice Oxley determined McCoy shifted her claim throughout the litigation and at trial presented a claim seeking damages based on a physical tort. The damages theory presented to the jury was based only on McCoy’s mental health injuries. Mental health injuries are compensable as physical injuries under the IWCA and thus were subject to the exclusivity provision.

Lastly, the Court rejected McCoy’s argument that her claims were outside workers’ compensation law because her injuries were caused by “the willful act of a third party directed against the employee for reasons personal to such employee,” as defined in Iowa Code § 85.16(3). McCoy only knew Thompson from work and her injuries occurred at work; her claims were based on the “‘wrong’ of the employer in failing to prevent the assault,” not a third party’s actions.

Tags: Iowa Supreme Court 2022-23