Matthew Jahnke v. Deere and Company, Richard Czarnecki, and Bernhard Haas ( 2018 )

IN THE SUPREME COURT OF IOWA
No. 17–0638
Filed May 18, 2018
MATTHEW JAHNKE,
Appellee,
vs.
DEERE & COMPANY, RICHARD CZARNECKI, and BERNHARD HAAS,
Appellants.
Appeal from the Iowa District Court for Polk County, David M.
Porter, Judge.
The defendants were granted an interlocutory appeal from the denial
by the district court of their motion for summary judgment. REVERSED
AND REMANDED.
Frank Harty and Debra Hulett of Nyemaster Goode, P.C., Des
Moines, for appellants.
Paige Fiedler and Nathan Borland (until withdrawal) of Fiedler &
Timmer, P.L.L.C., Johnston, and Roxanne Barton Conlin of Roxanne
Conlin & Associates, P.C., Des Moines, for appellee.
2
ZAGER, Justice.
Matthew Jahnke was employed by Deere & Company and worked as
the factory manager at Harbin Works located in Harbin, China, under a
contract with the Deere Chinese subsidiary. Jahnke reported to Richard
Czarnecki, who in turn reported to Dr. Bernard Haas. 1 In June 2014,
Deere removed Jahnke as the factory manager of Harbin Works and
repatriated him back to the United States. Deere ultimately assigned
Jahnke to a position of lesser authority and lower pay in Waterloo, Iowa.
This repatriation was taken as discipline for Jahnke engaging in
unreported sexual relationships with two female, Chinese employees who
were within his business span of control. Consequently, Jahnke filed suit
under the Iowa Civil Rights Act alleging Deere discriminated against him
based on his age, sex, and national origin. Deere moved for summary
judgment claiming that the Iowa Civil Rights Act did not apply
extraterritorially and that Jahnke based his claims on allegations of
discriminatory acts that occurred outside of Iowa. The district court
denied the motion. For the reasons expressed below, we reverse the
decision of the district court.
I. Background Facts and Proceedings.
Matthew Jahnke is a U.S.-born Caucasian male of Polish descent.
Jahnke began his employment with Deere in 1998. Jahnke was originally
hired to work as an assembly manager in Waterloo, Iowa. Since then, he
has been employed at various other locations within the Deere
organization, including Springfield, Missouri; Ankeny, Iowa; and Harbin,
China. In January 2011, Jahnke began a temporary expatriate work
assignment as a project manager for a Deere subsidiary in Harbin, China.
1We will collectively refer to the defendants in this opinion as Deere.
3
This assignment was scheduled to continue until December 2014. Jahnke
oversaw construction and startup of a new facility in the region known as
Harbin Works. Thereafter, Jahnke served as the factory manager of
Harbin Works once it began production.
Jahnke was employed at John Deere Des Moines Works in Ankeny,
Iowa, when he accepted this expatriate assignment. When a United States
citizen who works for Deere in the United States accepts an expatriate
assignment, Deere assigns the employee to a home unit and host unit
within its human resources systems. The home unit is the Deere location
where the employee was located when he or she accepted the expatriate
assignment. Thus, Jahnke’s home unit was in Ankeny, Iowa. The home
unit facilitates the international assignment paperwork, but it has
minimal to no contact with the expatriate during the expatriate
assignment. The home unit merely becomes the Deere unit where the
employee last worked before the expatriate assignment commences. There
is generally no established arrangement for the expatriate to return to the
home unit upon completion of the expatriate assignment. Meanwhile, the
host unit is the Deere location that the employee is assigned to as an
international employee. In this case, the host unit was John Deere (China)
Investment Co., Ltd. located in Beijing, China.
As a condition of this assignment, Jahnke was required to enter into
an employment contract with the host unit, John Deere (China)
Investment Co., Ltd. As part of this employment contract, Jahnke was
required to live and work in Harbin, China. Jahnke agreed to strictly
observe the laws and regulations of the Peoples Republic of China and the
various rules and systems of the company (China), including but not
limited to the Code of Business Conduct. The employment contract also
gave the company the right to impose disciplinary punishment on the
4
employee for his or her violation of any of the rules and systems of the
company. The host unit human resources department handled all human
resource functions. This included, but was not limited to, handling all
compensation, benefits, housing, vacation, and leave for its employees. As
an expatriate, Jahnke was also eligible for benefits and compensation that
were unavailable to United States citizens working for Deere within the
United States. These additional benefits included additional
compensation, a hardship allowance, a temporary living allowance, and
income tax equalization and tax preparation for domestic and foreign tax
returns. Deere placed Jahnke on its international payroll, which is
administered at Deere World Headquarters in Moline, Illinois. The host
unit was responsible for the expenses incurred in relocating Jahnke to
China and for any business expenses incurred by Jahnke during the term
of his employment.
Upon accepting his expatriate position in China, Jahnke sold his
home in Urbandale, Iowa, and lived in China from January 2011 until July
2014. Starting around 2012, Jahnke maintained a post office box in
Bettendorf, Iowa, to receive mail in Iowa. During his time working in
China, no income that Jahnke received was attributable to employment in
Iowa, and he did not file personal Iowa income tax returns. In 2013,
during the time Jahnke was living in China, he purchased a condominium
in Florida. As part of his loan application, he stated this condominium
would be his primary residence. Also in 2013, Jahnke copurchased a
townhouse in Australia with a Chinese citizen. On his mortgage
application and purchase contract, Jahnke claimed that his primary
residence was Beijing, China.
In June 2014, Jahnke became the subject of an investigation into
his relationship with a Chinese, female subordinate. This investigation
5
was conducted by international Deere employees working in China who
made up the China Compliance Committee. 2 The investigation initially
focused on the reported sexual relationship between Jahnke and Xu
Meiduo, a twenty-eight-year-old Chinese woman who worked in the Harbin
factory as a contracted language tutor. Jahnke had reported this
relationship to his human resources manager and the Deere compliance
hot line around February 2014. Further investigation revealed that
Jahnke was also in an on-again, off-again sexual relationship with another
Deere employee, Diana Pei, which began in 2011. Pei, a Chinese woman,
was around thirty-six years old and worked as a financial controller for
the Jiamusi, China factory when their relationship began. However, Pei
was also assigned to assist Jahnke and the Harbin factory finance
manager during the fall of 2011 through February 2012. Pei also served
as a compliance ambassador for Deere along with her other job
responsibilities. Neither Jahnke nor Pei reported their relationship to
anyone at Deere.
After the investigation was completed by the China Compliance
Committee, the compliance committee recommended that Jahnke—then
sixty-years old—be immediately removed from his position as factory
manager at Harbin Works and repatriated back to the United States. This
recommendation was the result of the committee’s conclusion that Jahnke
had engaged in sexual relationships with Chinese, female employees who
were within his span of control pursuant to the Code of Business Conduct.
Following the investigation, the China Compliance Committee
consulted with Laurie Simpson, the vice president and chief compliance
2The members of the China Compliance Committee at this time were Kara Fischer,
China finance manager; Andrew Jackson, global human resources director; Danny
MacDonald, security manager; Joanne Wang, China general counsel; and Jinghui Liu,
China country manager.
6
officer at Deere headquarters in Moline, Illinois. She agreed with the
conclusion of the committee that Jahnke had violated the Deere Code of
Business Conduct by failing to timely disclose his sexual relationships
with Pei and Meiduo. She also agreed with the proposed disciplinary
action. Consequently, Deere directed Richard Czarnecki and Dr. Bernard
Haas to travel to Beijing, China, to meet with Jahnke. 3 Deere directed
Czarnecki and Haas to inform Jahnke that he was being removed from his
position as factory manager of Harbin Works and repatriated back to the
United States. Czarnecki and Haas traveled to Beijing and met with
Jahnke. They advised Jahnke that he was being removed from his position
as factory manager of Harbin Works and would be repatriated back to the
United States. Jahnke was advised that the action was being taken as
discipline for his violation of the Deere Code of Business Conduct. It was
unknown at that time where Jahnke would be reassigned. However,
Jahnke was also considering retirement as an option. 4
In July 2014, Jahnke repatriated back to the United States. Upon
repatriation, Jahnke requested that Deere ship his personal belongings
from Harbin to his Florida home. In August, Jahnke began a new
assignment as the program manager at John Deere Waterloo Works in
Waterloo, Iowa. Jahnke went from a grade 13 salary position as factory
manager of Harbin Works to a grade 11 salary position as program
manager in Waterloo.
3Richard Czarnecki was the global director of large tractor products, and
Dr. Bernard Haas was the senior vice president for ag and turf global platform tractors.
Both of these individuals were based at Deere World Headquarters located in Moline,
Illinois.
4Following the investigation, Deere also provided Pei with a warning and
counselling for her role in the violation. Deere did not discipline Xu Meiduo for her
relationship with Jahnke, as she was a contract employee.
7
On August 12, Jahnke filed a complaint with the Iowa Civil Rights
Commission (ICRC). In the complaint, Jahnke claimed the decision to
remove him from his position as factory manager of Harbin Works and
repatriate him to the United States, as well as the decision to place him in
a position with a lower pay grade, was motivated by discrimination based
on his age, national origin, and sex. On April 24, 2015, Jahnke filed suit
under the Iowa Civil Rights Act (ICRA), alleging Deere subjected him to
employment discrimination based on his age, sex, and national origin. He
claimed Deere disciplined him more harshly than the female employees
with whom he had sexual relationships. Jahnke also alleged Deere
disciplined him more harshly than it did the Deere employees of Chinese
national origin who had engaged in comparable conduct. Moreover, he
alleged Deere made its disciplinary decisions based on impermissible
stereotypes regarding his age.
Deere moved for summary judgment on July 14, 2016, arguing the
ICRA does not apply extraterritorially and the alleged discriminatory acts
occurred entirely outside of Iowa. The district court denied summary
judgment, stating,
It is well-established, “a statute is prima facie operative only
as to the persons or things within the territorial jurisdiction
of the lawmaking powers which enacted it.” This summary
judgment record clearly establishes that both parties have
sufficient contact with the State of Iowa in order for the Iowa
Civil Rights Act to have territorial effect. On this issue,
Defendants’ Motion for Summary Judgment is DENIED.
Deere applied for interlocutory appeal from the denial of their motion for
summary judgment, which we granted. On appeal, Deere argues the ICRA
does not apply extraterritorially and that Jahnke was not within the
geographic reach of the ICRA as a United States citizen working abroad in
China.
8
II. Standard of Review.
“We review a district court ruling on a motion for summary judgment
for correction of errors at law.” Homan v. Branstad, 887 N.W.2d 153, 163
(Iowa 2016). Summary judgment is proper when the moving party has
shown “there is no genuine issue as to any material fact and the moving
party is entitled to judgment as a matter of law.” Id. When the district
court ruling on a motion for summary judgment presents a “legal question
involving statutory interpretation,” our standard of review on the statutory
interpretation issue is for correction of errors at law. Id. at 164.
III. Analysis.
Deere presents two arguments on appeal. First, Deere maintains
the district court erred in denying their motion for summary judgment
because the ICRA does not apply extraterritorially. Second, Deere argues
Jahnke was not within the geographic reach of the ICRA because he was
a U.S. citizen working abroad. We address each of these arguments
accordingly.
A. The Extraterritorial Reach of the ICRA. While Deere claims
the ICRA does not have extraterritorial reach, there is dispute between the
parties about whether applying the ICRA to this case would even require
extraterritorial application. Jahnke claims he is not seeking
extraterritorial application since his case involves a citizen of Iowa, and
there is a cause of action or rights that arose in Iowa, thereby allowing the
district court to apply the ICRA territorially. Throughout these
proceedings, Deere has consistently argued that the alleged discriminatory
acts occurred entirely outside of Iowa and that the ICRA has no
extraterritorial application. We granted interlocutory appeal based on
these claims made in Deere’s application for interlocutory appeal.
Therefore, we will address whether the ICRA applies extraterritorially.
9
It is a well-settled presumption that state statutes lack
extraterritorial reach unless the legislature clearly expresses otherwise.
Griffen v. State, 767 N.W.2d 633, 636 (Iowa 2009); State Sur. Co. v. Lensing,
249 N.W.2d 608, 612 (Iowa 1977). We explained this presumption in State
Surety Co., stating,
Unless the intention to have a statute operate beyond the
limits of the state or country is clearly expressed or indicated
by its language, purpose, subject matter, or history, no
legislation is presumed to be intended to operate outside the
territorial jurisdiction of the state or country enacting it. To
the contrary, the presumption is that the statute is intended
to have no extraterritorial effect, but to apply only within the
territorial jurisdiction of the state or country enacting it.
Thus, an extraterritorial effect is not to be given statutes by
implication. Accordingly, a statute is prima facie operative
only as to persons or things within the territorial jurisdiction
of the lawmaking power which enacted it. These rules apply
to a statute using general words, such as “any” or “all,” in
describing the persons or acts to which the statute applies.
They are also applicable where the statute would be declared
invalid if given an interpretation resulting in its extraterritorial
operation.
249 N.W.2d at 611 (quoting 73 Am. Jur. 2d Statutes § 359, at 492 (1974)).
This same presumption applies to federal statutes as well, for the
United States Supreme Court has held that federal statutes apply only
within the territorial jurisdiction of the United States unless Congress
provides a clear indication of extraterritorial application. Morrison v. Nat’l
Austl. Bank Ltd., 561 U.S. 247, 255, 130 S. Ct. 2869, 2877 (2010). “When
a statute gives no clear indication of an extraterritorial application, it has
none.” Id. at 255, 130 S. Ct. at 2878. Hence, the focus of our inquiry is
whether the Iowa legislature has “clearly expressed or indicated” that the
ICRA should apply extraterritorially through the statute’s “language,
purpose, subject matter, or history.” State Sur. Co., 249 N.W.2d at 611
(quoting 73 Am. Jur. 2d Statutes § 359, at 492). If not, the ICRA does not
apply extraterritorially. Id.
10
Nothing in the language of the ICRA expressly states or indicates
that it applies extraterritorially. While the ICRA does include certain broad
terms and definitions, such as its definition of “employee” as “any person
employed by an employer,” we are not convinced this broad language
evinces a legislative intent to apply the ICRA extraterritorially. Iowa Code
§ 216.2(6) (2015). Under our presumption against extraterritorial
application, “a statute is prima facie operative only as to persons or things
within the territorial jurisdiction of the lawmaking power which enacted
it” even if the statute uses general words to describe the persons the
legislation covers. State Sur. Co., 249 N.W.2d at 611 (quoting 73 Am. Jur.
2d Statutes § 359, at 492).
Further, we have long made clear our presumption that a statute
does not apply extraterritorially, and “we presume the legislature is aware
of our cases that interpret its statutes” in accord with this presumption.
Ackelson v. Manley Toy Direct, L.L.C., 832 N.W.2d 678, 688 (Iowa 2013).
In the past, when the Iowa legislature has intended for a statute to operate
extraterritorially, it has explicitly indicated this intent within the terms of
the statute. For example, the Iowa legislature overcame this presumption
against extraterritoriality in the workers’ compensation realm by expressly
extending the state workers’ compensation law beyond the borders of Iowa
in a subchapter titled “Extraterritorial Injuries and Benefit Claims.” Iowa
Code §§ 85.71–.72. This statute affirmatively states that it applies to
employees injured “while working outside the territorial limits of this state”
if certain circumstances are met. Id. § 85.71.
Similarly, we have held that the Iowa Tort Claims Act (ITCA) applies
extraterritorially because the statute contains explicit language indicating
an intention for it to apply beyond the borders of Iowa. Griffen, 767 N.W.2d
at 636. Specifically, the ITCA states, “[W]here the act or omission occurred
11
outside of Iowa and the plaintiff is a nonresident, the Polk county district
court has exclusive jurisdiction to hear, determine, and render judgment”
on claims filed under the ITCA. Iowa Code § 669.4. In contrast, the ICRA
lacks similar language indicating an extraterritorial reach.
Another example of the Iowa legislature explicitly indicating its
intent regarding the extraterritorial application of a statute is Iowa Code
section 803.1, the state criminal jurisdiction statute. Section 803.1
provides that a person may be prosecuted in Iowa for conduct “outside this
state” when “a result which constitutes an element of the offense[ ] occurs
within this state.” Id. § 803.1(1)–(2). In State v. Rimmer, we relied on that
language in section 803.1 to hold the state could prosecute criminal
defendants who placed phone calls from outside Iowa to the insurer’s
employee in an Iowa claims office to induce payment of a fraudulent
insurance claim for an accident staged in Illinois. 877 N.W.2d 652, 675–
76 (Iowa 2016). In doing so, we stated, “Our holding is consistent with the
legislature’s intent to enlarge Iowa’s territorial jurisdiction.” Id. No
equivalent language appears in the ICRA.
“Statutory text may express legislative intent by omission as well as
inclusion,” and we may not read language into the statute that is not
evident from the language the legislature has chosen. State v. Iowa Dist.
Ct., 730 N.W.2d 677, 679 (Iowa 2007). 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. 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
12
legislature did not do so, and it is not for us to alter the ICRA by expanding
it to apply extraterritorially. See id.
Likewise, nothing in the purpose, subject matter, or history of the
ICRA expressly states or indicates that the Iowa legislature intended for
the statute to operate beyond the borders of the State of Iowa. The Iowa
legislature enacted the ICRA in 1965 with the goal of creating equality in
the workplace. Pippen v. State, 854 N.W.2d 1, 5, 9 (Iowa 2014). To
accomplish this goal, the ICRA established the ICRC, which consists “of
seven members appointed by the governor subject to confirmation by the
senate” and a director “who shall serve as the executive officer.” Iowa Code
§ 216.3. Thus, the ICRC is an administrative agency comprised of Iowans
who are selected by Iowans and presided over by an Iowan that is tasked
with the responsibility of enforcing the ICRA through an administrative
process. See id.
As an administrative agency, the ICRC is “limited to the power
granted by statute.” Brakke v. Iowa Dep’t Nat. Res., 897 N.W.2d 522, 533
(Iowa 2017); see also Iowa Code § 17A.23(3). Iowa Code section 216.5
prescribes the authority of the ICRC and provides further support for our
finding that the Iowa legislature never intended for the ICRA to apply
extraterritorially. For example, the ICRA provides the ICRC with the
authority to investigate discrimination “in this state and to attempt the
elimination of such discrimination by education and conciliation.” Iowa
Code § 216.5(3) (emphasis added). It also authorizes the ICRC “[t]o issue
such publications and reports of investigations and research as in the
judgment of the commission shall tend to promote goodwill among the
various racial, religious, and ethnic groups of the state.” Id. § 216.5(6)
(emphasis added).
13
When the ICRC conducts proceedings to determine whether a
respondent violated the ICRA, the Iowa Administrative Procedure Act
governs those proceedings in contested cases. Id. § 216.15(8). Moreover,
the ICRA emphasizes the duty of the ICRC to work with the Governor of
Iowa and the Iowa legislature to accomplish the goals of the ICRA. See,
e.g., id. § 216.5(7) (making it a duty for the ICRC to annually “prepare and
transmit” reports on the work it performs to the Governor and the Iowa
legislature); id. § 216.5(8) (stating the ICRC has a duty “[t]o make
recommendations to the general assembly for such further legislation
concerning discrimination”). Part of accomplishing the goals of the ICRA
includes promulgating administrative rules meant to deter discrimination,
such as portions of the Iowa Administrative Code in which the ICRC
acknowledges the geographic limitations of the ICRA to the territorial
boundaries of Iowa. See, e.g., Iowa Admin Code r. 161—8.15(3)
(prohibiting any “newspaper or other publication published within the
state of Iowa” from advertising employment notices that indicate age
discrimination); id. r. 161—8.56(1) (“All newspapers within the state of
Iowa shall cease to use sex-segregated want ads.”). In summary, the ICRC
“has been authorized by the legislature to interpret, administer, and
enforce the Iowa Civil Rights Act to eliminate discriminatory and unfair
practices in employment in Iowa.” Rent-A-Center, Inc. v. Iowa Civil Rights
Comm’n, 843 N.W.2d 727, 734 (Iowa 2014) (emphasis added). Given the
crucial role of the ICRC in enforcing and promoting the ICRA in Iowa, its
lack of express extraterritorial reach further indicates the intention of the
Iowa legislature for the ICRA to apply only within the State of Iowa.
Finally, there are strong policy considerations in favor of applying
the presumption against extraterritoriality to the ICRA. Applying the ICRA
extraterritorially creates the potential for conflicts with the laws of other
14
states and countries. The ICRA reflects the policy decisions of Iowa and
imposing those state policy choices “on the employment practices of our
sister states should be done with great prudence and caution out of
respect for the sovereignty of other states, and to avoid running afoul of
the Commerce Clause of the United States Constitution.” Union
Underwear Co. v. Barnhart, 50 S.W.3d 188, 193 (Ky. 2001) (applying the
presumption against extraterritoriality in holding the Kentucky Civil
Rights Act did not apply extraterritorially). These interstate comity
concerns and conflict-of-laws issues have led a majority of courts to
decline to extraterritorially apply human rights-related statutes beyond
their clear geographic reach. See, e.g., E.E.O.C. v. Arabian Am. Oil Co., 499
U.S. 244, 259, 111 S. Ct. 1227, 1236 (1991) (declining to apply a former
version of Title VII extraterritorially); Ferrer v. MedaSTAT USA, LLC, 145 F.
App’x 116, 120 (6th Cir. 2005) (holding the Kentucky Civil Rights Act did
not apply extraterritorially); Judkins v. St. Joseph’s Coll. of Me., 483 F.
Supp. 2d 60, 65 (D. Me. 2007) (declining to apply the Maine Human Rights
Act where the alleged discriminatory acts took place outside of Maine).
Like these courts, we are unwilling to expand the reach of the ICRA to
apply extraterritorially since there is not clear evidence of legislative intent
to do so.
Nevertheless, our inquiry does not end here, as the district court
found extraterritorial application of the ICRA was unnecessary in this case
since the territorial jurisdiction of the ICRA extended to “persons or things
within the territorial jurisdiction of the lawmaking power which enacted
it.” The district court subsequently denied summary judgment, noting the
“summary judgment record clearly establishes that both parties have
sufficient contact with the State of Iowa in order for the Iowa Civil Rights
Act to have territorial effect.” Thus, we next address Deere’s claim that
15
the district court incorrectly relied on the parties’ contacts with Iowa in
finding that the ICRA has territorial effect in this case.
B. The Territorial Boundaries of the ICRA. Deere maintains the
district court erred in finding the ICRA has territorial effect in this case
based on the parties’ contacts with Iowa. In response, Jahnke asserts the
ICRA applies territorially so long as “the case involves citizens of Iowa or a
cause of action or rights that arose in Iowa,” even if some of the conduct
at issue occurred outside of Iowa or the United States. Thus, Jahnke
reasons, the ICRA applies to his case because it involves an Iowan working
“on temporary assignment in China, who was discriminated against by
Iowans who made their discriminatory decisions in Iowa.”
The underlying claim in this case is a disparate-treatment
discrimination claim under the ICRA. A complainant bringing such a
claim must show a discrete discriminatory employment action that took
place within the scope of employment in Iowa. See Dindinger v. Allsteel,
Inc., 860 N.W.2d 557, 570 (Iowa 2015); Rent-A-Center, Inc., 843 N.W.2d at
734; see also Iowa Code § 216.6. This requirement coincides with the
structure, purpose, and language of the ICRA, and it calls for us to
examine where the focus of the relationship between the employee and
employer took place to determine whether it is reasonable to conclude the
ICRA applies.
Iowa Code section 216.2(7) defines an employer as any entity or
person “employing employees within this state.” Iowa Code § 216.2(7).
Since the term “employing” and “employees” weld together into a single
concept of “employing employees,” it is necessary to explore where the core
of the employment relationship is located. In making the determination of
where the employment relationship is located, the location of the employee
at the time of the alleged civil rights violation is an important, but not
16
necessarily determinative, factor. The location of the employer may also
be germane, depending upon the facts and circumstances. For example,
suppose sexual harassment that occurs on a construction crew working
in Nebraska is reported to the main office of an employer in Des Moines,
but the Iowa employer takes no action. Is there an Iowa civil rights claim
against that Iowa employer even though the harassment occurred in
Nebraska? Would it matter if the crew were on a temporary assignment
in Nebraska? Would it matter that the alleged harassment was part of a
continuing course of conduct, some in Iowa and some in other states?
Thus, the mere location of the employee at the time of the alleged incident
of discrimination is not always determinative of the question of whether
the alleged unlawful event involved a person or entity “employing
employees in this state,” at least when the employer making the decisions
related to the alleged unlawful conduct is located in Iowa.
Yet, in this case, the location of both the employee and the employer
demonstrates that the ICRA is not applicable since the crux of the
employment relationship between Jahnke and Deere was rooted in China,
and perhaps Illinois, rather than Iowa. At the time of the alleged
discriminatory employment action, Jahnke lived and worked in China for
the Deere subsidiary that operated in China under Chinese laws. Jahnke
was operating under an employment contract that was to be performed in
China. It required Jahnke to live and work in China in order to meet his
employment obligations. As the annual Deere Performance Management
Appraisal described his position, Jahnke was “responsible for the
operation of the Harbin factory in northeast China and either through solid
or dotted line, responsible for all the functions due to the location.”
Additionally, while he did occasionally return to Iowa as part of his
responsibilities as the factory manager of Harbin Works, he also
17
occasionally worked with people in various locations internationally since
Harbin Works planned the assembly for three product platforms.
Nonetheless, the scope of his position was “a unit based role.” Because
Jahnke’s host unit was in China, his employment was based in China,
where he dealt with issues unique to China. Though Czarnecki and Haas
reside in Scott County, Iowa, each of these individuals work out of the
Deere World Headquarters located in Moline, Illinois. Mere residency in
Iowa by Czarnecki and Haas cannot lead to the inference that the crux of
the employment relationship between Deere and Jahnke is rooted in Iowa.
Because of this geographical limitation on the ICRA, we cannot agree
with the district court that the ICRA applies to this case simply due to the
parties’ contacts with Iowa. The district court erroneously expanded the
ICRA beyond its reach by applying the ICRA merely because the parties
have “sufficient contact with the State of Iowa.” For many of the same
reasons the ICRA does not apply extraterritorially, the ICRA does not apply
to employment actions that occurred outside of Iowa solely because some
of the people involved in those actions may have had contact with Iowa.
The portion of the ICRA governing venue also demonstrates that the
ICRA does not apply to this case. Under the ICRA, venue is proper “in the
county in which the respondent resides or has its principal place of
business, or in the county in which the alleged unfair or discriminatory
practice occurred.” Id. § 216.16(5). Jahnke’s petition does not support
his claim that Iowa, or more specifically Polk County, is the proper venue
for his employment discrimination claim. 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. As his home unit, it performed all of the
necessary paperwork to complete the expatriation in 2011. Other than
18
that, there was no further involvement by the home unit during the time
Jahnke was employed in China, and no one at the home unit was involved
in the decision to remove Jahnke from his position of factory manager and
repatriate him to the United States.
Jahnke also fails to point to any discrete discriminatory employment
action taken in Polk County, and the record discloses none. All of the
alleged adverse employment actions Jahnke complains of occurred in
China or Illinois. Jahnke was repatriated back to the United States due
to alleged misconduct he engaged in with Chinese Deere employees in
China. This misconduct, and the investigation of this misconduct, was
conducted in China by members of the China Compliance Committee who
all lived in China while working for John Deere (China). This compliance
committee generally handles compliance issues surrounding Deere
employees who work in China. When the China Compliance Committee
conducts a compliance case, it decides whether an employee violated any
corporate policies, the depth of any violations, and the ramifications of
such violations. In some cases, it will consult Deere’s corporate
compliance committee in Moline, Illinois, before reaching a conclusion,
similar to what occurred here. But the overwhelming responsibility to
conduct investigations and make recommendations based on those
investigations, falls within the purview of the China Compliance
Committee.
In addition to the considerable evidence demonstrating that the
alleged adverse employment actions took place outside of Iowa, the record
does not support the connection Jahnke claims exists between Iowa and
the alleged employment discrimination at issue. For example, on his ICRC
complaint form, Jahnke lists “825 SW Irvinedale Drive, Ankeny, Iowa
50023 and China” as “the address of the location where the discrimination
19
occurred.” While Ankeny was Jahnke’s home unit that set up his contract
with Deere’s China subsidiary, nothing in the record links Deere’s
employment decisions about Jahnke to his Ankeny home unit. The Deere
location in Ankeny helped Jahnke with administrative tasks, such as
initiating his international assignment paperwork, but his Deere unit of
operation and assignment for management responsibilities was in China.
Jahnke claims “[a] reasonable jury can find Czarnecki and Haas
were the ones responsible for [his] demotion and repatriation [and that
t]hey made those decisions from Iowa.” However, Jahnke does not provide
any citations to the record to support this conclusion, and the record itself
is devoid of any evidence that Czarnecki or Haas played any role in the
investigation of Jahnke or the ultimate recommendation by the China
Compliance Committee to remove Jahnke as factory manager and
repatriate him to the United States. It is clear from the record that these
decisions came from the members of the Deere compliance committees in
China and Moline. It was only at that time that Czarnecki and Haas, as
the managers who Jahnke reported to, were instructed to travel to China
to inform Jahnke of the decision to remove him as factory manager and
inform him of his repatriation to the United States. This is exactly what
they did. Likewise, Jahnke does not provide any citations to the record to
support that any of these employment decisions were made from Iowa.
When Czarnecki was deposed, he testified that the compliance
department had already reached its conclusion regarding whether Jahnke
participated in inappropriate relationships. Czarnecki was merely
informed of the relationships and the conclusions of the compliance
department. When asked whether he participated “in the decision to
decide what the consequences should be,” Czarnecki stated he had only
engaged in discussions on how the decision to repatriate Jahnke would be
20
executed since he was responsible for discussing this with Jahnke. He
also explained that Laurie Simpson, who served as vice president and chief
compliance officer for the Deere Compliance Committee, decided the
appropriate action for Jahnke. Simpson, who is based at the Deere World
Headquarters in Moline, Illinois, based her decision on the results of the
investigation performed by the China Compliance Committee and its
recommended action. While Jahnke tries to compare his 2014
performance appraisal that Czarnecki completed to Pei’s performance
appraisal to support his disparate treatment claim, the two appraisals are
not comparable since Shican Zhang—not Czarnecki—completed Pei’s
appraisal. The only input Czarnecki had regarding Jahnke came after
Deere had already decided to remove him from his factory manager
position and repatriate him back to the United States. Following this
decision, Czarnecki was involved in finding suitable employment for
Jahnke back in the United States.
Similarly, the deposition of Haas confirms that he did not take part
in any investigation of Jahnke, nor did he have any input into the
conclusion of the China Compliance Committee or its recommendations.
When Jahnke’s attorney questioned Haas about his role in deciding how
to punish Jahnke following the investigation, Haas testified he did not play
a role in making that decision. Haas testified that the compliance
committee was responsible for deciding whether Jahnke violated Deere
policy and the resulting punishment for any violation. Haas further
explained that he had never even seen a copy of the investigation report
on Jahnke, and he still had not seen a copy of it at the time of his
deposition. Like Czarnecki, the only role Haas played in repatriating
Jahnke back to the United States was informing Jahnke that he was no
longer the factory manager of Harbin Works and that he was going to be
21
repatriated back to the United States. Similar to Czarnecki, he was
involved in decisions regarding employment for Jahnke with Deere in the
United States following Jahnke’s repatriation.
Overall, the documents and testimony in the record demonstrate
that Czarnecki and Haas did not participate in the compliance
investigation involving Jahnke, nor were they involved in the ultimate
decision to discipline Jahnke for his alleged inappropriate relationships.
The record also shows Czarnecki and Haas never read the compliance
investigation summary detailing Jahnke’s alleged misconduct, and they
played no part in deciding how or whether the female employees who were
in relationships with Jahnke would be disciplined. What the record does
reflect is that the China Compliance Committee, located in China, and the
Deere Compliance Committee, located in Moline, Illinois, decided to
investigate Jahnke for alleged violations of the Code of Business Conduct.
What the record also reflects is that as a result of this investigation in
China, the China Compliance Committee concluded there had been a
violation of the Code of Business Conduct based on Jahnke engaging in
sexual relationships with two, female Chinese nationals who also worked
for Deere in China. The compliance committee also concluded that these
female employees worked with and under Jahnke while he was the factory
manager of Harbin Works in Harbin, China. As a result of its investigation
and conclusions, it recommended that Jahnke be removed as factory
manager and repatriated to the United States. As noted above, this
recommendation was accepted by the Deere Compliance Committee
located in Moline. There is nothing in the record to support Jahnke’s
notion that “[i]t is icing on the cake that at least some of the illegal acts
took place in Iowa,” based on his unsupported assertion that Czarnecki
22
and Haas made the decisions from Iowa to remove him from his position
as factory manager in China and repatriate him to the United States.
Nothing in this record supports a conclusion that the focus of this
employment relationship was Iowa. Similarly, Jahnke cannot show that
any discrete discriminatory employment action took place in Iowa. The
only ties that Jahnke had to Iowa were intermittent trips to Iowa while he
was living and working in China and a post office box to receive mail. The
fact that Czarnecki and Haas had residences in Iowa, or that Deere had
operations in Iowa, is also unpersuasive. Nothing in the ICRA
demonstrates an intent for the ICRA to apply to discrimination claims
made against an employer simply because of the parties’ tangential
relations with Iowa in cases where the alleged discrimination took place
outside of Iowa. See Rent-A-Center, Inc., 843 N.W.2d at 734. (The ICRC
“has been authorized by the legislature to interpret, administer, and
enforce the Iowa Civil Rights Act to eliminate discriminatory and unfair
practices in employment in Iowa.”).
Moreover, nothing in the ICRA recognizes domicile or residence as
the standard to determine whether the ICRA applies to employment
discrimination claims as Jahnke contends. The only reference to
“domicile” in the ICRA is in the definition of “familial status” as “one or
more individuals under the age of eighteen domiciled with” certain
designated family members. Iowa Code § 216.2(9)(a). That provision is
inapplicable to the portion of the ICRA prohibiting unfair employment
practices. See id. § 216.6(1). Meanwhile, the rest of the ICRA contains no
requirement for a complainant to have an Iowa domicile or residence, nor
does it exclude a complainant that lacks an Iowa residence or domicile.
Although our legislature may have a strong interest to enact
[employment laws] to protect nonresidents when they cross
23
our border to perform work in Iowa, it would have no strong
interest in protecting nonresidents in those instances where
they perform work outside of Iowa.
Runyon v. Kubota Tractor Corp., 653 N.W.2d 582, 589 (Iowa 2002) (Cady,
J., concurring).
At the time of the alleged discriminatory acts, Jahnke was residing
in China and performing work in China. Jahnke had no demonstrable ties
to Iowa. In fact, at the time of the alleged discriminatory acts, Jahnke’s
most significant ties were in China, Florida, or Australia, where he then
had residences. He had no such residence in Iowa. The alleged
discriminatory acts also took place outside of Iowa. The only connection
to Iowa in this situation occurred after the alleged discriminatory conduct
occurred when he was assigned to Waterloo, Iowa, upon repatriation back
to the United States. The Iowa legislature has not indicated or specified
an intent or interest to protect “nonresidents in those instances where they
perform work outside of Iowa” from alleged unfair employment practices
that took place outside of Iowa. Id.
Additionally, like applying the ICRA extraterritorially, applying the
ICRA to claims involving employees who perform work outside of Iowa
simply due to the contacts that the parties have with the State of Iowa
would create interstate comity concerns and conflict-of-laws issues. To
illustrate, the ICRA recognizes sexual orientation and gender identity as
protected classes in the employment discrimination context while our
western neighbors in Nebraska and South Dakota do not. Compare Iowa
Code § 216.6(1)(a) (including “sexual orientation” and “gender identity” as
protected classes under the ICRA from unfair or discriminatory
employment practices), with Neb. Rev. Stat. Ann. § 48-1104 (West,
Westlaw through April 18, 2018 of the 2d Reg. Sess. of the 105th Leg.)
(establishing the following protected classes under the state employment
24
discrimination statute: “race, color, religion, sex, disability, marital status,
or national origin”), and S.D. Codified Laws § 20-13-10 (Westlaw through
2018 Reg. Sess.) (stating it is unlawful for an employer to discriminate
“because of race, color, creed, religion, sex, ancestry, disability, or national
origin”). Yet, if the ICRA is applied based on tangential contacts such as
the domicile of the employee bringing suit, an Iowan who is employed in
Nebraska or South Dakota could potentially have viable claims of sexual
orientation or gender identity discrimination against a non-Iowa employer
under the ICRA. These discrimination claims would be based on actions
that happened wholly outside of Iowa and without any discernible ties to
an Iowa employer. This sort of situation demonstrates the interstate
comity concerns that could arise by applying the ICRA too broadly based
on a party’s contacts with Iowa. This is also consistent with the language
of the statute.
Finally, declining to apply the reach of the ICRA in this case does
not leave employees in a similar situation to Jahnke without a remedy.
Jahnke argues that he was the victim of unfair employment practices that
occurred in China and Moline, Illinois. Jahnke could have brought
alternative employment discrimination claims under Title VII and the Age
Discrimination in Employment Act (ADEA). See 29 U.S.C. § 630(f) (2012);
42 U.S.C. § 2000e(f). Likewise, it is possible that Jahnke may have had a
claim under the Illinois Human Rights Act or the laws in China. See, e.g.,
775 Ill. Comp. Stat. Ann. § 5/1-103(A) (West, Westlaw through P.A. 100-
585 of 2018 Reg. Sess.). Ultimately, he chose to forego these options and
pursue a claim under the ICRA despite the fact that the alleged
discriminatory actions took place outside of Iowa.
In conclusion, the ICRA does not apply extraterritorially because it
contains no clear and affirmative expression or indication of an
25
extraterritorial reach. Likewise, the ICRA does not apply in this case
because the plaintiff has failed to show either that the employee or the
employer was located within Iowa for purposes of the alleged
discriminatory act. Mere Iowa residency and the presence of some ties to
Iowa is insufficient to establish that the employment relationship is located
“in this state.” With respect to the employer, decisions related to the
plaintiff were made in China, and perhaps in Moline, Illinois, but not in
Iowa. The mere filing of paperwork in Ankeny, Iowa, and the residence of
corporate executives in Iowa do not establish an employment relationship
in Iowa in any functional way. Under these circumstances, the plaintiff
may have a federal civil rights claim and may have a claim under Illinois
law, but he has no claim under the Iowa Civil Rights Act.
IV. Conclusion.
For the aforementioned reasons, we reverse the decision of the
district court and remand to the district court for entry of summary
judgment in favor of Deere.
REVERSED AND REMANDED.
All justices concur except Hecht and Mansfield, JJ., who take no
part.