Iowa law and the state Supreme Court are stuck in a holding pattern in which victims of employment discrimination cannot seek punitive damages in court.
In ruling released today, the Iowa Supreme Court stood by rulings issued over the past 27 years that have found that the Iowa Civil Rights Act does not give courts the authority to award punitive damages.
"We did our job (27) years ago and will leave it for the legislature to take any different approach," the court ruled in a case in which two women said they were subject to verbal and physical abuse at a toy distribution company in Indianola.
The case prompted friend of the court briefs from civil rights law firms and employer groups, which fell under the umbrella of the Iowa Association of Business Industry (ABI).
ABI attorneys argued that "punitive damage awards can give rise to adverse consequences to businesses, including the threat of insolvency. ... ABI also points out that 'Iowa is geographically surrounded by states that have business-friendly legal climates with respect to this issue. . . . Iowa competes with these states to attract new businesses, as well as for the jobs and commerce they generate.' Second, ABI argues that the costs of punitive damages award will be passed on to consumers and shareholders," according to the ruling.
Judges held that Warren County Judge Gregory Hulse properly interpreted years of legal precedents and lack of legislative action to the contrary when he ruled in favor of Manley Toy Direct LLC, Toy Network LLC and related companies in dropping claims for punitive damages. The companies are based in Hong Kong.
The Supreme Court observed that states vary in providing for punitive damages. It noted that the Iowa Legislature has failed to act on the issue, even though Iowa law does allow for punitive damages in cases involving housing discrimination.
Attorneys for the women argued that the Supreme Court opened the door for punitive damages claims when it determined that the Iowa Civil Rights Act does provide for jury trial in district court, although that language is not specified in the act.
Iowa law does not specifically prohibit punitive damages, but neither does it "imply" that those damages can be awarded, according to the ruling, which was written by Chief Justice Mark Cady.
In the case, which was brought on behalf of the women by Newkirk Law Firm PLC, three women said a supervisor and another male employee made vulgar and harassing comments, including demeaning name-calling, and sexually explicit and offensive discussions about one of the plaintiffs' sexual relationships.
The discrimination ended after the women left the company, according the lawsuit. The case was remanded to Warren County District Court for further proceedings.
Nyemaster Goode P.C. represented the toy companies.
Read a Business Record article about the case.