Joanne Cote v. Derby Insurance Agency, Inc., an Iowa Corporation, and Kevin Dorn, Individually
908 N.W.2d 861
Iowa2018Background
- Derby Insurance Agency (a subchapter S corporation) was owned and operated by Patricia Dorn; her husband Kevin Dorn supervised employees. Joanne Cote worked there and alleged long‑running sexual harassment by Kevin.
- During the relevant period Derby employed Patricia and Kevin Dorn, Cote, Patricia Strawn (niece), another nonfamily employee, and a part‑time grandniece.
- Cote filed ICRC charge and then sued under the Iowa Civil Rights Act (ICRA) for hostile‑work‑environment sex discrimination and later added common‑law tort claims; defendants moved for summary judgment.
- Defendants argued Derby employed fewer than four individuals if family members are excluded under Iowa Code § 216.6(6)(a); district court denied summary judgment, ruling corporations cannot claim the family‑member exception.
- The court of appeals affirmed; the Iowa Supreme Court granted review limited to whether a corporation may claim the family‑member exception and affirmed that a corporation cannot have “family members” for § 216.6(6)(a) purposes.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a corporate employer may exclude owner’s family from employee count under Iowa Code § 216.6(6)(a) | Cote: Corporation has no family; family‑member exclusion should not apply to Derby | Derby: When owner incorporates, owner’s family should still be excluded from the employee count | Court: Corporations are fictitious entities and do not have family members; the family‑member exception does not apply to corporations |
Key Cases Cited
- Kerrigan v. Errett, 256 N.W.2d 394 (Iowa 1977) (corporations are fictitious entities)
- Huebner v. MSI Ins., 506 N.W.2d 438 (Iowa 1993) (corporations do not have “family members” for insurance‑policy coverage)
- Simon Seeding & Sod, Inc. v. Dubuque Human Rights Comm’n, 895 N.W.2d 446 (Iowa 2017) (discusses ICRA construction and numerosity as an element of liability)
- Burwell v. Hobby Lobby Stores, Inc., 134 S. Ct. 2751 (U.S. 2014) (closely held corporations claimed RFRA protection; discussed but found inapplicable here)
- Patten v. Ackerman, 846 P.2d 567 (Wash. Ct. App. 1993) (refused to apply family‑member exclusion to a corporation)