In the recent case of Jahnke v. Deere & Co. (May 18, 2018), the Iowa Supreme Court ruled that a Deere employee who was repatriated to the United States as discipline for engaging in sexual misconduct while on assignment at a Deere factory in China did not state a claim for discrimination under the Iowa Civil Rights Act (ICRA)
Jahnke sued Deere in Iowa State Court, alleging the decision to repatriate him from China to a lower paying job in Waterloo, Iowa was based on his age, sex, and national origin. While on assignment as the manager of a Deere factory in China, Jahnke engaged in sexual relationships with two younger, Chinese women who were in his “span of control”, which violated Deere’s policies. Jahnke claimed Deere violated the Iowa Civil Rights Act because his discipline was harsher than that imposed on the female employees with whom he had the relationships.
The trial court denied Deere’s motion for summary judgment, but the Iowa Supreme Court granted Deere’s application for interlocutory appeal to address two issues. First, whether the ICRA has extra-territorial application. Second, whether the geographic reach of the ICRA extends to a U.S. Citizen working abroad where the employer has a presence in Iowa but the alleged discrimination occurred in the foreign country.
The Iowa Supreme Court answered the first question “no”, the ICRA does not apply to acts of discrimination that occur outside of Iowa. There is a presumption in the law that a statute does not apply extraterritorially, unless the legislature expressly intends otherwise. The Court found nothing in the language of the ICRA indicating the legislature intended it to extend to acts that occur outside of Iowa.
Even though the ICRA does not apply to discriminatory acts in other states or foreign countries, Jahnke claimed it nonetheless applied to his claims because he was an Iowan working on temporary assignment in China, who was discriminated against by Iowans who made their discriminatory decisions in Iowa.
It was true that Jahnke and Deere both had connections in Iowa. Jahnke’s last assignment in the United States before moving to China was at Deere’s Ankeny plant. When repatriated he was assigned to a factory in Waterloo, Iowa. But, when he assigned to manage the Chinese factory, all of the decisions concerning Jahnke’s employment were made in China, or from Deere’s world headquarters in Moline, Illinois. The compliance committee that investigated Jahnke’s misconduct was based in China, and personnel in China made the recommendation that Jahnke be repatriated to the U.S. Two Deere mangers were charged with communicating the decision to Jahnke and executing his return to the U.S. Both of them lived in Iowa, but worked at Deere’s Moline headquarters, across the river in Illinois.
The Court found that the focus of Jahnke’s employment relationship while on assignment in China was in China, or perhaps Illinois. There was no evidence of discrete employment actions that occurred in Iowa. The Court was not persuaded that Jahnke’s occasional trips back to Iowa for work purposes, Deere’s substantial operations in Iowa, or that the Iowa residence of the two Deere managers involved in returning Jahnke to the U.S, was sufficient to provide ICRA coverage.
The Jahnke decision is important to Iowa employers that have employees in foreign countries and other states. Just because an employer has an Iowa presence does not necessarily allow an employee based somewhere else to sue in Iowa courts claiming protection under the Iowa civil Rights Act. Such an employee may have claims under federal law, but federal law and federal court is generally a more favorable to employers than is an Iowa Civil Rights Act claim in state court.