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Cote v. Derby Insurance Agency, Inc.

Court of Appeals of Iowa

August 2, 2017

JOANNE COTE, Plaintiff-Appellee,
DERBY INSURANCE AGENCY, INC., an Iowa Corporation, and KEVIN DORN, Individually, Defendants-Appellants.

         Appeal from the Iowa District Court for Woodbury County, Jeffrey L. Poulson, Judge.

         On this interlocutory appeal, the defendants challenge the district court's denial of their motion for summary judgment. AFFIRMED IN PART, REVERSED IN PART, AND REMANDED FOR FURTHER PROCEEDINGS.

          Edward F. Pohren and Aaron F. Smeall of Smith, Slusky, Lazer, Pohren & Rogers, L.L.P., Omaha, Nebraska, for appellants.

          Jay Denne and Stanley E. Munger of Munger, Reinschmidt & Denne, L.L.P., Sioux City, for appellee.

          Heard by Vaitheswaran, P.J., and Tabor and Mullins, JJ.

          PER CURIAM.

         Joanne Cote worked for Derby Insurance Agency from 1998 until 2014. In 2014, she sued the agency and Kevin Dorn (collectively, Derby), [1] alleging sexual discrimination based on a hostile work environment, as well as the torts of intentional infliction of emotional distress and assault. On interlocutory appeal, Derby challenges the district court's denial of its motion for summary judgment, first arguing it is exempt from the provisions of the Iowa Civil Rights Act (ICRA) because it had less than four employees and, second, contending all of Cote's claims are either time barred, preempted, or fail to raise a question of material fact.

         On the employee-numerosity issue, the district court appropriately decided Derby, as a corporation, did not qualify for the statutory exemption for "members of the employer's family." Iowa Code § 216.6(6)(a) (2014). Accordingly, Derby is subject to the ICRA. On the statute-of-limitations issues, the district court correctly found Cote alleged inappropriate actions that occurred within the limitations periods. Derby failed to secure a district court ruling on its argument the alleged torts were preempted by the ICRA. Thus, we decline to address the preemption issue. On the intentional-infliction-of-emotional-distress claim, we find sufficient evidence of "outrageous conduct" to generate a jury question. But on the assault claim, we conclude the court should have granted summary judgment to Derby. Accordingly, we affirm in part, reverse in part, and remand for further proceedings.

         I. Facts and Prior Proceedings

         We start with an overview of the facts from the summary judgment record, taken in the light most favorable to Cote, the nonmoving party. See Roll v. Newhall, 888 N.W.2d 422, 425 (Iowa 2016). Derby is organized as an Iowa subchapter "S" corporation. Its president and sole shareholder is Patricia Dorn, who is married to Kevin Dorn. Cote started work for Derby as a customer-service representative. In 2003, she was promoted to office manager.

         Cote alleges Kevin Dorn sexually harassed her and other female colleagues over a period of seven years.[2] The first complaint came from employee Sandy Dobson, who told Cote in 2005 that Dorn came into Dobson's office and exposed his genitals to her. According to Cote, she and Dobson "talked it out and both agreed it was a fluke thing." But when Dorn again exposed himself to Dobson a short time later, Dobson began documenting the incidents. In her affidavit, Dobson reported being "shocked" by Dorn's behavior. Cote recalled Dorn exposing himself to Dobson one or two more times before Dobson ended her employment with Derby. Neither Cote nor Dobson took any additional action at that time.

         Dorn renewed his pattern of harassing behavior about two years later- exposing his genitals to Derby employee Stephanie Ptak. According to Cote, the incident occurred in the front area of the office while Dorn was standing at the facsimile machine. Cote was gone for lunch when Dorn approached Ptak, but Ptak disclosed the harassment to Cote as soon as she returned to the office. Like Dobson, Ptak ended her employment with Derby before either she or Cote took any further action. Cote shared information about Dorn's conduct toward Dobson and Ptak with another female coworker at the time it occurred.

         After Dobson and Ptak left Derby, Dorn turned his sexual harassment toward Cote, according to her affidavit. The first incident was in 2007, when she was working "up front in the customer services area." She alleged: "[N]o one else was present because it was early in the morning and I was generally the only person who showed up for work on time before 8:30 a.m." She claimed Dorn came around her desk "with an obvious erection in his pants." She stated: "I didn't want to believe that he was sexually harassing me at first because I was older than Sandy and Stephanie, but as he kept doing it, it was obvious."

         Cote alleged in her affidavit that Dorn "did the same thing several times per year." Cote also described several of these harassing incidents in her complaint to the Iowa Civil Rights Commission (ICRC). She recalled that during one incident when Dorn stood particularly close to her, she reached for some papers and accidentally touched his penis with the back of her hand. In an April 2011 encounter, Dorn stood near Cote asking her questions; Cote answered but did not look at him, fearing he would be exposing his genitals. Dorn left and then returned, faced Cote, and again asked her a question. Cote made eye contact with Dorn, trying to avoid looking at his crotch. But she "could tell his pants were unzipped, and gaping open." Dorn left Cote's area when another Derby employee arrived in the parking lot.

         Cote described another incident of harassment that occurred in Dorn's vehicle. She recalled Dorn would sometimes drive her to work during the winter when the weather was bad. During one such trip, Dorn "drove the whole way to work with his right hand groping his crotch and left hand on the steering wheel."

         Cote also discussed an incident from February 2012, in which Dorn stood near the facsimile machine and asked her questions. When she looked at Dorn, "his pants were unzipped and gaping open." On one occasion during March 2012, Dorn came to her "sexually aroused wanting [her] to look at him by asking [her] stupid questions." Cote recalled that Dorn continued to similarly harass her "periodically" throughout June and July 2012. She alleged Dorn "would come wandering around my work area, either asking me about something, or not saying anything at all." In her ICRC complaint, Cote wrote: "I IMMEDIATELY feel my body tense up and try not to look at him. I am confident he is 'displaying' himself again (like always), because I can tell by his demeanor."

         Cote asserted Dorn stopped harassing her "around August 1, 2012." She filed her ICRC complaint on April 10, 2013. The ICRC issued an administrative release, commonly called a right-to-sue letter, on January 10, 2014. Cote filed her petition in April 2014, alleging a hostile work environment[3] and sex-based discrimination claim. Cote amended her petition in May, asserting Dorn had assaulted her and intentionally inflicted emotional distress.

         In December 2015, Derby filed a motion for summary judgment. In March 2016, the district court denied Derby's motion, with the exception of "grant[ing] summary judgment on Cote's [tort] claims to the degree that they are based on events that occurred before April 7, 2012."

         Derby appeals; Cote has not cross-appealed.[4]

         II. Scope and Standards of Review

         We review the district court's denial of summary judgment for correction of legal error. See Jones v. Univ. of Iowa, 836 N.W.2d 127, 139 (Iowa 2013).

[S]ummary judgment is appropriate if the record reveals a conflict only concerns the legal consequences of undisputed facts. When reviewing a court's decision to grant summary judgment, we examine the record in the light most favorable to the nonmoving party and we draw all legitimate inferences the evidence bears in order to establish the existence of questions of fact.

Id. at 139-40 (quoting Pitts v. Farm Bureau Life Ins. Co., 818 N.W.2d 91, 96-97 (Iowa 2012)).

         "To the extent [an] appeal involves questions of statutory interpretation, we review for correction of errors at law." State v. Howse, 875 N.W.2d 684, 688 (Iowa 2016) (citation omitted). We construe the ICRA "broadly to effectuate its purposes." Iowa Code § 216.18(1). One purpose of the ICRA is to "eliminate unfair and discriminatory practices" in employment. Foods, Inc. v. Iowa Civil Rights Comm'n, 318 N.W.2d 162, 170 (Iowa 1982). "An Iowa court faced with competing legal interpretations of the [ICRA] must keep in mind the legislative direction of broadly interpreting the Act when choosing among plausible legal alternatives." Pippen v. State, 854 N.W.2d 1, 28 (Iowa 2014).

         III. Analysis

         On appeal, Derby claims: (A) the district court erroneously interpreted Iowa Code section 216.6(6)(a) by finding the family-member exception does not apply to corporate employers; (B) the district court should have dismissed Cote's claims as untimely; (C) Cote's tort claims were preempted by the ICRA; and (D) Cote did not allege sufficient undisputed material facts to support the elements of her tort claims.

         A. Employee-Numerosity Requirement/Family-Member Exception

         Derby contends the ICRC and the district court should not have entertained Cote's claim of hostile work environment because Iowa Code section 216.6, governing unfair employment practices, does not apply to businesses having less than four employees.[5] This employee-numerosity requirement is expressed in the statute as follows: "This section shall not apply to . . . [a]ny employer who regularly employs less than four individuals. For purposes of this subsection, individuals who are members of the employer's family shall not be counted as employees." Iowa Code § 216.6(6)(a); see also Simon Seeding & Sod, Inc. v. Dubuque Human Rights Comm'n, 895 N.W.2d ...

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