John Baker and Valerie Baker v. City of Iowa City, Iowa and Iowa City Human Rights Commission, 2015 Iowa Sup. LEXIS 62

Background

John and Valerie Baker own out-of-state rental property in Iowa City and employ a resident manager; they rejected an applicant over childcare and lack of references.
The applicant filed a complaint with the Iowa City Human Rights Commission alleging employment discrimination under an Iowa City ordinance that prohibited discrimination by employers with one or more employees.
Bakers sued under 42 U.S.C. § 1983 claiming the ordinance conflicted with Iowa law (which exempts employers with fewer than four employees) and violated federal constitutional rights (due process, equal protection; later amended to add First Amendment speech and association claims).
In Baker I the Iowa Supreme Court held the ordinance exceeded municipal home-rule authority under the Iowa Constitution and remanded; the Bakers renewed their motion to amend to add First Amendment claims.
On remand the district court permitted the amendment and granted summary judgment to the City; the Bakers appealed the denial of § 1983 relief and attorney’s fees, and the City cross-appealed the allowance of the amendment.
The Iowa Supreme Court affirmed: amendment on remand was not an abuse of discretion, but the City’s enforcement of the ordinance did not violate the Bakers’ federal constitutional rights, so no § 1983 liability or § 1988 attorney’s fees.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether district court abused discretion by allowing amendment to add First Amendment claims	Bakers: amendment was proper and previously raised; should be allowed on remand	City: amendment would substantially change issues and was waived by not appealing earlier denial	Allowed — district court did not abuse discretion; City not prejudiced or surprised
Freedom of association (First Amendment)	Bakers: ordinance as applied to small employer infringed intimate-association rights	City: relationship with remote resident manager is not a protected intimate association	Denied — no protected intimate, personal relationship; no association violation
Freedom of speech (commercial speech)	Bakers: ordinance chilled job-posting and hiring speech	City: posting permitted; ordinance regulates discrimination, a substantial interest; speech is commercial and subject to Central Hudson	Denied — job ad is commercial speech; City interest substantial; regulation directly advances interest and is not overly extensive
Procedural due process	Bakers: enforcement procedure deprived them of due process	City: administrative probable-cause hearing, merits hearing, and appeal rights provided adequate process	Denied — administrative procedures satisfy Mathews balancing; Bakers prematurely sued rather than exhaust process
Substantive due process	Bakers: enforcement infringed fundamental rights (speech/association)	City: no fundamental right implicated; ordinance rationally related to legitimate interest	Denied — no fundamental right implicated; rational-basis review applies and is satisfied
Equal protection	Bakers: ordinance irrationally classifies by exempting some employers (religious, home employees, personal-service) but not small employers	City: exemptions rationally related to legitimate interests (religious exercise, personal-security concerns)	Denied — classifications survive rational-basis review
Attorney's fees under § 1988	Bakers: prevailed on related state constitutional claim and seek fees	City: Bakers lost federal claims	Denied — Bakers not prevailing parties on federal claims, so no § 1988 fees

Key Cases Cited

Roberts v. United States Jaycees, 468 U.S. 609 (recognition of freedom of intimate association)
Central Hudson Gas & Elec. Corp. v. Public Serv. Comm’n of N.Y., 447 U.S. 557 (four-part commercial-speech test)
Mathews v. Eldridge, 424 U.S. 319 (three-part balancing test for procedural due process)
City of Cleburne v. Cleburne Living Ctr., 473 U.S. 432 (equal protection scrutiny framework)
Heller v. Doe by Doe, 509 U.S. 312 (description of rational-basis review in equal protection)
Virginia v. American Booksellers Ass’n, Inc., 484 U.S. 383 (standing to challenge a statute that chills speech)
Pittsburgh Press Co. v. Pittsburgh Comm’n on Human Relations, 413 U.S. 376 (employment ads are commercial speech)
Clackamas Gastroenterology Assocs., P.C. v. Wells, 538 U.S. 440 (discussion of employer-coverage thresholds under federal law)
Baker v. City of Iowa City, 750 N.W.2d 93 (Iowa 2008) (prior decision invalidating the ordinance under Iowa home-rule provision)