A former Deere & Co. factory manager cannot sue the company under the Iowa Civil Rights Act because he worked and lived in China when he was disciplined for having sexual relationships with two Chinese woman also employed by the company, the Iowa Supreme Court said Friday.
The ruling establishes for the first time that the Iowa Civil Rights Act does not apply to circumstances that occur outside the state even though the parties involved may have some Iowa connection.
The decision means the lawsuit filed by Matthew Jahnke will be dismissed.
Jahnke, who began working for Deere in 1998, took a job with the company in Harbin in the northeast part of China in 2011 to oversee the construction of a new factory and to manage it once completed.
In April 2014, Deere received internal reports that one of Jahnke's employees had "procured several very expensive luxury cars" for Jahnke, and helped Jahnke "find beautiful women" in exchange for favorable performance reviews. The reports prompted an investigation that revealed Jahnke had sexual relationships with two Chinese women who also worked at the Deere Harbin factory.
The company concluded that Jahnke violated its code of business conduct because he failed to timely disclose sexual relationships with women he managed.
The Deere employee responsible for the initial investigation concluded in his report that Jahnke, a 60-year-old man involved in a sexual relationship with a 28-year-old woman, could cause embarrassment and negative perception for the company and "there could be the obvious perception of an oldish factory manager abusing his influence/position_and create (sic) some possible exposure for the company."
The second woman with which he had a relationship was 36, court documents said.
Jahnke was demoted and returned to Waterloo, Iowa.
He sued Deere under the Iowa Civil Rights Act alleging Deere discriminated against him based on his age, sex, and national origin. He said he was disciplined much more severely than the women involved.
The company asked the court to dismiss the case and find that the Iowa Civil Rights Act does not apply to workers outside the state. But a judge concluded that Jahnke and Deere "have sufficient contact with the State of Iowa in order for the Iowa Civil Rights Act to have territorial effect." Deere appealed.
The Iowa Supreme Court overturned that decision, finding that if the Iowa Legislature wanted the law to apply to workers outside the state it would have expressly written it into the act.
"Yet, the Iowa legislature did not do so, and it is not for us to alter the ICRA by expanding it to apply extraterritorially," the court said.
The court also disagreed with the lower court judge that both the company and Jahnke had sufficient connection to the state for the law to apply.
Justices noted Jahnke lived and worked in China for a Deere subsidiary that operated in China under Chinese law.
"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 court said.
Jahnke could have claimed discrimination under the U.S. Age Discrimination in Employment Act and may have had a claim under the Illinois Human Rights Act or the laws in China because Deere is based in Moline, Illinois, the court said.
Attorneys for Jahnke did not immediately respond to messages.
Deere spokesman Ken Golden said "the decision speaks for itself concerning Deere's position in this matter."