Ackelson v. Manley Toy Direct, L.L.C.

• Decision Date: 21 June 2013
• Docket Number: No. 12–0442.,12–0442.
• Citation: 832 N.W.2d 678
• Parties: Tammie ACKELSON, Appellant, v. MANLEY TOY DIRECT, L.L.C. and Toy Network, L.L.C., et al., Appellees. Robin Drake and Heather Miller, Appellants, v. Manley Toy Direct, L.L.C. and Toy Network, L.L.C., et al., Appellees.
• Court: Iowa Supreme Court

832 N.W.2d 678

Tammie ACKELSON, Appellant,

v.MANLEY TOY DIRECT, L.L.C. and Toy Network, L.L.C., et al., Appellees.

Robin Drake and Heather Miller, Appellants,

v.Manley Toy Direct, L.L.C. and Toy Network, L.L.C., et al., Appellees.

No. 12–0442.

Supreme Court of Iowa.

June 21, 2013.

Jill M. Zwagerman and Bryan P. O'Neill of Newkirk Law Firm, P.L.C., Des Moines, for appellants.

Frank B. Harty, Mary E. Funk, Debra L. Hulett of Nyemaster Goode, P.C., Des Moines, and Frances M. Haas of Nyemaster Goode, P.C., Cedar Rapids, for appellees.

Thomas J. Duff of Duff Law Firm, P.L.C., Des Moines, Kodi A. Brotherson and Katie A. Ervin Carlson of Babich Goldman, P.C., Des Moines, and Emily E. McCarty of Fiedler & Timmer, P.L.L.C., Urbandale, for amicus curiae Iowa Association of Justice.

James P. Craig, Brenda K. Wallrichs, and Megan R. Dimitt of Lederer Weston Craig, P.L.C., Cedar Rapids, for amicus curiae Iowa Defense Counsel Association.

Russell L. Samson and Sara R. Laughlin of Dickinson, Mackaman, Tyler & Hagen, P.C., Des Moines, for amicus curiae Iowa Association of Business and Industry.

CADY, Chief Justice.

In this appeal, we must decide whether the Iowa Civil Rights Act (ICRA) permits a district court to award punitive damages. The district court held an award of punitive damages is not permitted under the ICRA. On our review, we affirm the decision of the district court and remand for further proceedings.

I. Background Facts and Proceedings.

Tammie Ackelson, Robin Drake, and Heather Miller were employees of Manley Toy Direct and Toy Network, both limited liability companies located in Indianola, Iowa, with parent companies in Hong Kong. The businesses purchase and sell toys and other merchandise.

In 2010, the three employees initiated lawsuits against the businesses, collectively referred to as Manley Toy, and certain individuals associated with the businesses. The petitions alleged employment practice claims based on a violation of the ICRA. The claims alleged a supervisor named Tim Downey and a coworker named Steffen Hampton repeatedly made vulgar and harassing comments to the women, including demeaning name-calling, and sexually explicit and offensive discussions about Downey's sexual relationships. The lawsuits articulated claims for sexual harassment, sex discrimination, and retaliation under the ICRA and demanded punitive damages. No other claims were alleged.

Manley Toy moved to strike the claim for punitive damages. The district court granted Manley Toy's motion. It reasoned that the court could only grant relief that the civil rights commission was authorized to grant, and punitive damages are not available under the ICRA.

The plaintiffs sought, and we granted, interlocutory appeal. They ask us to review our prior decisions holding that punitive damages are not available for claims under the ICRA and to interpret the ICRA to permit courts to award punitive damages.

II. Standard of Review.

We review a decision by the district court on a motion to strike for correction of legal errors. SeeIowa R.App. P. 6.907. Similarly, we review an interpretation of a statute for correction of legal errors. Rolfe State Bank v. Gunderson, 794 N.W.2d 561, 564 (Iowa 2011).

III. Discussion.

A. ICRA Framework. The ICRA prohibits unfair and discriminatory employment practices against a person “because of” the person's membership in a protected class and provides for a claim for relief. Iowa Code §§ 216.6(1)( a ), .15 (Supp.2009). Persons who seek to assert their rights under the ICRA, however, must follow the statutory processes to obtain relief. See id. §§ 216.15–.16. This procedure begins by filing a complaint with the state civil rights commission, but eventually permits an action to be pursued in court.¹

Section 216.16(6) of the ICRA provides that “[t]he district court may grant any relief in an action under this section which is authorized by section 216.15, subsection 9, to be issued by the commission.” Id. § 216.16(6). In turn, section 216.15(9) provides:

If ... the commission determines that the respondent has engaged in a discriminatoryor unfair practice, the commission ... shall issue an order requiring the respondent to cease and desist from the discriminatory or unfair practice and to take the necessary remedial action as in the judgment of the commission will carry out the purposes of this chapter.

Id. § 216.15(9). Additionally, in allowing the ICRA to award damages to the complainant, section 216.15(9)( a)(8) states:

For the purposes of this subsection and pursuant to the provisions of this chapter “remedial action” includes but is not limited to the following:

....

... Payment to the complainant of damages for an injury caused by the discriminatory or unfair practice which damages shall include but are not limited to actual damages, court costs and reasonable attorney fees.

Id. § 216.15(9)(a)(8).

The ICRA was enacted in 1965. 1965 Iowa Acts ch. 121 (codified at 105A.1–.12 (1966)). It was subsequently amended in 1978 to require the exhaustion of administrative remedies before proceeding into court through the statutory procedures that remain in the Act today. See 1978 Iowa Acts ch. 1179 (codified at § 601A.1–.19 (1979)). However, the statutory language at issue in this case has not been changed in any meaningful way since the 1978 amendments.²

B. Existing Case Authority. We have previously held the legislative scheme of the ICRA does not permit an award of punitive damages. See Chauffeurs, Teamsters & Helpers, Local Union No. 238 v. Iowa Civil Rights Comm'n, 394 N.W.2d 375, 384 (Iowa 1986). In Chauffeurs, a union sought judicial review of a commission decision awarding emotional distress and punitive damages to an individual excluded from the union on the basis of race. Id. at 377. The union argued the damages section under the ICRA did not give the commission statutory authority to award punitive damages. Id. at 384. In response, the commission argued the plain meaning of the statutory phrase “ ‘damages shall include but are not limited to actual damages' ” implied the availability of punitive damages. Id. (quoting Iowa Code § 601A.15(8)( a ) (8) (1979) (current version at id. § 216.15(9)( a )(8) (Supp.2009))).

We held the statutory phrase pertaining to damages “[did] not necessarily imply punitive damages are available.” Id. We relied primarily on the reasoning of High v. Sperry Corp., 581 F.Supp. 1246, 1247–48 (S.D.Iowa 1984). See Chauffeurs, 394 N.W.2d at 384. The court in High found the district court's authority to award damages is no more extensive than that of the commission. 581 F.Supp. at 1247. It reasoned that although “actual damages” is often synonymous with “compensatory damages”—which seemingly includes everything other than punitive damages—“actual damages” also sometimes merely means “pecuniary losses and [does] not include other types of non-punitive damages, such as special damages.” Id. “Thus, the phrase ‘not limited to actual damages' in the Iowa statute [did] not necessarily imply the availability of punitive damages.” Id. The court predicted:

[I]f and when the issue is presented to the Iowa Supreme Court, it will interpret the term “actual damages” in the Iowa statute to be a reference only to pecuniary losses and will construe the phrase in which that term is found—“which damages shall include but are not limited to actual damages”—to fall short of enabling the commission to award punitive damages. I think it most unlikely that the Iowa Supreme Court would ever find power in an administrative agency to award punitive damages to a claimant unless there were an express legislative grant of such power.

Id. at 1248.

We confirmed this prediction, stating, “The language ‘but not limited to actual damages' in [ICRA] does not necessarily imply punitive damages are available.” Chauffeurs, 394 N.W.2d at 384. We also relied on “[t]he general rule ... that an administrative agency cannot award punitive damages absent express statutory language allowing such an award.” Id.

Four years later, in Smith v. ADM Feed Corp., we reiterated our interpretation of the ICRA that punitive damages were not available unless expressly provided. 456 N.W.2d 378, 383 (Iowa 1990), overruled on other grounds by McElroy v. State, 703 N.W.2d 385, 394–95 (Iowa 2005). We stated:

Unlike [the Federal Fair Housing Act], [the ICRA] does not permit an administrative agency, or the district court ..., to award punitive damages. In Chauffeurs, we noted the general rule that an agency cannot award punitive damages absent express statutory language and concluded that the language “but not limited to actual damages” in section 601A.15(8)( a )(8) [current version at Iowa Code § 216.15(9)( a )(8) (Supp.2009) ] does not necessarily imply that punitive damages are available.

Smith, 456 N.W.2d at 383 (citation omitted). We also observed “[t]he district court sits as the commission and is empowered to grant only that relief authorized by section [216.15].” Id. at 381 (citing Iowa Code § 601A.16(5) (current version at id.§ 216.16(6))).

Following Chauffeurs and Smith, we have continued to mention in a series of cases that punitive damages are not an available remedy unless expressly provided for under the ICRA. See, e.g., Channon v. United Parcel Serv., Inc., 629 N.W.2d 835, 849 (Iowa 2001). The last case to make this pronouncement was in 2004. See Van Meter Indus. v. Mason City Human Rights Comm'n, 675 N.W.2d 503, 515 (Iowa 2004) (citing Chauffeurs and holding that if the state civil rights commission lacks the power to award punitive damages so does a local civil rights commission). One case, City of Hampton v. Iowa Civil Rights Commission, cited Chauffeurs when it held the plaintiff introduced insufficient evidence to support an emotional-distress award. 554 N.W.2d 532, 537 (Iowa 1996). It reasoned that an emotional-distress award that was clearly excessive given the scant evidence the plaintiff introduced would be essentially...