Opinion
4:21-cv-00022
2021-07-19
Linda BETZ, Plaintiff, v. FEDERAL HOME LOAN BANK OF DES MOINES, Zeeshan Kazmi, Sunil Mohandas, and Mike Wilson, Defendants.
Megan C. Flynn, Michael J. Carroll, Hockenberg & Flynn, P.C., West Des Moines, IA, for Plaintiff. Debra Hulett, Haley Hermanson, Nyemaster Goode PC, Des Moines, IA, for Defendants.
Megan C. Flynn, Michael J. Carroll, Hockenberg & Flynn, P.C., West Des Moines, IA, for Plaintiff.
Debra Hulett, Haley Hermanson, Nyemaster Goode PC, Des Moines, IA, for Defendants.
ORDER
ROBERT W. PRATT, U.S. DISTRICT JUDGE
Before the Court is a Motion to Dismiss State Law Claims or for Summary Judgment on Count VIII filed by Defendants Federal Home Loan Bank of Des Moines, Zeeshan Kazmi, Sunil Mohandas, and Mike Wilson. ECF No. 6. Plaintiff Linda Betz responded to Defendants’ Motion, ECF No. 23, and Defendant filed a Reply, ECF No. 34. Neither party requested oral argument, and the Court does not believe oral argument will substantially aid it in resolving the issues before it. Therefore, the matter is fully submitted.
I. FACTUAL AND PROCEDURAL BACKGROUND
Defendant Federal Home Loan Bank of Des Moines (FHLB) is a federally chartered corporation organized under the Federal Home Loan Bank Act of 1932 (FHLBA), 12 U.S.C. §§ 1421 – 1449. ECF No. 1-11 ¶ 3. Defendant Wilson was CEO of Defendant FHLB at all relevant times. Id. ¶ 5. Defendant Mohandas was the Chief Risk Officer of Defendant FHLB at all relevant times. Id. ¶ 6.
On March 19, 2018, Plaintiff began her employment with FHLB as the Chief Information Security Officer. Id. ¶¶ 10, 12. Plaintiff was hired to correct deficiencies in FHLB's information security. Id. ¶¶ 41, 43. Prior to her hiring, she had twenty-two years of experience in the field of information security and an additional fifteen years of experience in the technology field generally. Id. ¶ 11. During Plaintiff's employment with FHLB, she received positive job performance feedback as well as a raise. Id. ¶¶ 13, 14.
In September or October 2019, Defendant Kazmi was hired as FHLB's Interim Chief Information Officer as an independent contractor. Id. ¶¶ 15, 16. Plaintiff alleges that not long after Kazmi started at FHLB, it became apparent that he is sexist and treats female and male employees differently. Id. ¶ 17. Plaintiff further alleges Wilson and Mohandas tolerated Kazmi's sexist behavior and promoted him rather than correcting his behavior. Id. ¶ 18. On September 18, 2019, Wilson introduced Kazmi to Plaintiff. Id. ¶ 19. During this introduction, Kazmi complimented Plaintiff on her involvement in a leadership strategy meeting held out of state. Id. ¶ 19. Approximately one month after their meeting, however, Kazmi made comments to Plaintiff regarding differences he saw between men and women and their relationships with work in the context of what he viewed "is wrong with [FHLB]." Id. ¶¶ 20–21. Plaintiff was shocked by Kazmi's comments to her and reported them to FHLB's Senior Vice President of Human Resources, Nancy Betz. Id. ¶ 22. Plaintiff asked Nancy to be discreet because Plaintiff was still trying to build a relationship with Kazmi; Nancy told Plaintiff she would convey Plaintiff's complaint to Wilson without revealing Plaintiff's identity. Id. ¶¶ 23–25.
Plaintiff and Nancy Betz are not related. ECF No. 1-11 ¶ 22.
Plaintiff alleges she attempted to engage with Kazmi by arranging two meetings with him to discuss substantive information security issues. Id. ¶ 26. Despite being Plaintiff's direct supervisor, Kazmi rarely met with her. Id. ¶ 27. In contrast, Kazmi regularly met with his only other direct supervisee, who was male. Id. ¶¶ 28–29. Kazmi also worked directly with Plaintiff's subordinates without telling Plaintiff even when Plaintiff offered to help with meetings. Id. ¶ 30.
Plaintiff alleges that many FHLB employees had complaints about Kazmi. Id. ¶ 31. At one point, the FHLB Human Resources department installed an employee feedback box. Id. ¶ 37. Plaintiff completed a card listing her complaints and put it in the box. Id. ¶ 38. Plaintiff also submitted two ethics complaints about Kazmi. Id. ¶ 39.
Plaintiff alleges other FHLB employees also believed Defendant Mohandas treated female employees more negatively as compared to male employees. Id. ¶ 32. Despite Plaintiff's role and experience, Mohandas did not solicit Plaintiff's advice regarding FHLB's information security system or take actions based on Plaintiff's input. Id. ¶ 41. Mohandas and Kazmi disagreed with Plaintiff as to FHLB's information security risk, presented their own conclusions to FHLB's Board of Directors, and did not invite Plaintiff to the Board meeting. Id. ¶¶ 45–50.
On January 3, 2020, Plaintiff's employment with FHLB was terminated. Id. ¶ 52. That same day, FHLB filed a Form 8-K with the Securities and Exchange Commission (SEC), notifying the SEC of Plaintiff's employment termination. Id. ¶ 98. Wilson informed Plaintiff that FHLB had "decided to go in a different direction" with information security, one that was "more risk-based." Id. ¶¶ 53, 54. Plaintiff questions Wilson's reason for firing her when he was expected to retire later that month. Id. ¶ 56. Plaintiff alleges the reason Wilson gave was a pretext and the real reason she was fired was because Mohandas and Kazmi—whom Wilson supported—disapproved of female employees, especially those who disagreed with them. Id. ¶¶ 57, 58. Plaintiff also alleges it was her adherence to her viewpoints on FHLB's information security risk and her expression of those views that resulted in the termination of her employment. Id. ¶ 59.
On January 21, 2021, Plaintiff filed her First Amended and Substituted Petition at Law and Jury Demand in the Iowa District Court for Polk County. ECF No. 1-11. Defendants removed the action to federal court. ECF No. 1. In her state-court pleading, Plaintiff alleges sex discrimination, harassment, and retaliation against all Defendants in violation of the Iowa Civil Rights Act (ICRA), Iowa Code §§ 216.1 – 216.22, and Title VII (Counts I–IV). She further alleges defamation, invasion of privacy (false light), and blacklisting against all Defendants (Counts V–VII). Plaintiff alleges tortious interference with her employment rights against Defendant Kazmi (Count VIII) and civil conspiracy against all individual Defendants (Count IX). Plaintiff also alleges wrongful termination in violation of public policy of the State of Iowa against all Defendants (Count X). On February 3, Defendants filed their motion to dismiss Counts I, III, V, VI, VII, VIII, IX, and X of Plaintiff's First Amended and Substituted Petition pursuant to Federal Rule of Civil Procedure 12(b)(6) for failing to state a claim upon which relief can be granted. ECF No. 6.
Defendants alternatively moved for summary judgment on Count VIII. ECF No. 6 ¶ 16. Defendants have since moved to withdraw their alternate motion for summary judgment on this count. ECF No. 42. The Court grants Defendants’ motion to withdraw.
II. STANDARD OF REVIEW
"Under [ Rule] 12(b)(6), the factual allegations in the complaint are accepted as true and viewed most favorably to the plaintiff." Hager v. Ark. Dep't of Health , 735 F.3d 1009, 1013 (8th Cir. 2013). In order "[t]o survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’ " Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Bell Atl. Corp. v. Twombly , 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ). "A pleading that merely pleads ‘labels and conclusions,’ or a ‘formulaic recitation’ of the elements of a cause of action, or ‘naked assertions’ devoid of factual enhancement will not suffice." Hamilton v. Palm , 621 F.3d 816, 817–18 (8th Cir. 2010) (quoting Iqbal , 556 U.S. at 678, 129 S.Ct. 1937 ). "Determining whether a claim is plausible is a ‘context-specific task that requires the reviewing court to draw on its judicial experience and common sense.’ " Id. (quoting Iqbal , 556 U.S. at 679, 129 S.Ct. 1937 ).
III. ANALYSIS
Defendants assert a multitude of arguments and alternative arguments for why all of Plaintiff's claims except Counts II and IV—her Title VII claims for sex discrimination and harassment and retaliation against FHLB—must fail at the motion-to-dismiss stage. The Court addresses each issue in turn below.
A. Preemption
In their Motion, Defendants argue Plaintiff's sex discrimination and retaliation claims under the ICRA (Counts I and III) are completely preempted by the FHLBA's "dismiss at pleasure" provision, 12 U.S.C. § 1432(a). Alternatively, Defendants contend that if the Court declines to dismiss these claims based on complete preemption, the Court should apply its preemption analysis from Ewing v. Federal Home Loan Bank of Des Moines , 645 F. Supp. 2d 707 (S.D. Iowa 2009), and conclude that, to the extent Plaintiff's claims under the ICRA are in direct conflict with Title VII, such claims are preempted. Defendants further argue Plaintiff's state common-law claims for tortious interference with Plaintiff's employment rights, civil conspiracy, and wrongful termination in violation of public policy (Counts VIII through X) are completely preempted by the FHLBA.
It is well settled that "state law that conflicts with federal law is ‘without effect’ " under the doctrine of preemption. Cipollone v. Liggett Grp., Inc. , 505 U.S. 504, 516, 112 S.Ct. 2608, 120 L.Ed.2d 407 (1992). The doctrine is founded in the Supremacy Clause of the United States Constitution, which provides that the "Constitution, and the Laws of the United States which shall be made in Pursuance thereof ... shall be the supreme Law of the Land." U.S. Const. art. VI, cl. 2.
There are three general categories of preemption: (1) express preemption, where "Congress define[s] explicitly the extent to which its enactments preempt
state law"; (2) field preemption, where Congress's regulatory scheme is "so pervasive as to make reasonable the inference that Congress left no room for the States to supplement it" or where an Act of Congress "touches a field in which the federal interest is so dominant that the federal system will be assumed to preclude enforcement of state laws on the same subject"; and (3) conflict preemption, where state and federal law directly conflict, making it "impossible for a private party to comply with both state and federal requirements" or where state law "stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress." English v. Gen. Elec. Co. , 496 U.S. 72, 78–79, 110 S.Ct. 2270, 110 L.Ed.2d 65 (1990) (citations omitted); see also CSX Transp., Inc. v. Easterwood , 507 U.S. 658, 663, 113 S.Ct. 1732, 123 L.Ed.2d 387 (1993) ("Where a state statute conflicts with, or frustrates, federal law, the former must give way."); Nordgren v. Burlington N. R.R. Co. , 101 F.3d 1246, 1248 (8th Cir. 1996).
Ewing , 645 F. Supp. 2d at 710–11.
1. Plaintiff's Claims Under the ICRA
Here, as in Ewing , the Court is faced with a question of conflict preemption. See id. at 711 ("Defendants contend that conflict preemption operates to bar Plaintiff's ICRA claim[s] because the ICRA's prohibition of ‘unfair employment practices’ directly conflicts with FHLB's enabling statute."). The federal statute at issue provides that, once a Federal Home Loan Bank has been incorporated, it has the power "to select, employ, and fix the compensation of ... officers, employees, attorneys, and agents as shall be necessary for the transaction of its business; to define their duties, ... and to dismiss at pleasure such officers, employees , attorneys, and agents." 12 U.S.C. § 1432(a) (emphasis added).
In Ewing , this Court noted that "[t]he question of whether the ‘dismiss at pleasure’ provision of the [FHLBA] preempts state anti-discrimination laws is one of first impression in this circuit" and that "[o]ther courts considering the ‘dismiss at pleasure’ language of § 1432(a) or identical language in the National Bank Act ... and the Federal Reserve Act ... ha[d] considered the issue and reached varying conclusions." 645 F. Supp. 2d at 711–12. This Court closely examined the holdings of the other courts and rejected the position urged by the defendants both in Ewing and here—"that the ‘dismiss at pleasure’ language operates to wholly preempt state employment laws." Ewing , 645 F. Supp. 2d at 712. Instead, this Court held state-law discrimination claims under the ICRA are preempted only to the extent such claims are in direct conflict with federal law. Id. at 720. Subsequent decisions of other districts in this circuit agree with the Court's conclusions in Ewing. See Morris v. U.S. Bank , No. 4:12-cv-281-DPM, 2013 WL 139923, at *2–3 (E.D. Ark. Jan. 10, 2013) ; see also Bowen v. U.S. Bank Nat'l Ass'n , No. 19-cv-2683, 2020 WL 3429698, at *8 (D. Minn. June 22, 2020) (holding that the plaintiff's claim under the state whistleblower law was not preempted by the National Bank Act's dismiss-at-pleasure provision).
Having considered the parties’ arguments, the Court follows its prior holding in Ewing. Plaintiff's claims under the ICRA for sex discrimination and harassment (Count I) and retaliation (Count III) are preempted to the extent that the provisions of the ICRA are in direct conflict with the provisions of Title VII.
2. Plaintiff's State Common-Law Tort Claims
Next, Defendants argue Plaintiff's state common-law tort claims are completely preempted by the FHLBA. Defendants contend that, because there is no counterpart in federal law to Plaintiff's claim for wrongful termination, the dismiss-at-pleasure language of the FHLBA preempts Plaintiff's state common-law claim. Defendants also point to decisions of other courts that have held state-law claims arising out of the employment relationship are preempted by the dismiss-at-pleasure provision of the FHLBA or identical language of the Federal Reserve Act or the National Bank Act. See, e.g., Walleri v. Fed. Home Loan Bank , 83 F.3d 1575, 1578–79, 1582 (9th Cir. 1996) (recognizing that, although the bank's "statutory power to dismiss at pleasure" would not "necessarily preempt[ ] claims based on an employer's wrongful act directed at the employee outside of the employment relationship ..., the conduct complained of [in the plaintiff's emotional distress allegations] relate[d] solely to the employment relationship").
Plaintiff responds generally that the Court should narrowly construe conflict preemption and find that her state-law claims are only preempted if they directly conflict with federal law.
"[C]ourts ... consistently have held that banks are subject to liability for discrimination under federal anti-discrimination laws irrespective of the bank's right to dismiss an officer (or employee) ‘at pleasure.’ " Kroske v. U.S. Bank Corp. , 432 F.3d 976, 986 (9th Cir. 2005). As noted above, some courts, including this one, have allowed claims based on state anti-discrimination laws that mirror their federal counterparts. See Ewing , 645 F. Supp. 2d at 720–22. Courts have not, however, expanded this holding to allow state common-law tort claims. See Kroske , 432 F.3d at 984–85 ; see also Wiersum v. U.S. Bank, N.A. , 785 F.3d 483, 491 (11th Cir. 2015) ; Walleri , 83 F.3d at 1582 ; Andrews v. Fed. Home Loan Bank of Atlanta , 998 F.2d 214, 220 (4th Cir. 1993). This makes sense when examining Congress's intentions in passing the national banking laws. Congress "create[d] a national banking system with ‘uniform and universal operation through the entire territorial limits of the country.’ " Kroske , 432 F.3d at 989 (quoting Talbott v. Bd. of Comm'rs , 139 U.S. 438, 443, 11 S.Ct. 594, 35 L.Ed. 210, (1891) ). Thus, "state law prohibitions against discriminatory termination that are not consistent with federal anti-discrimination laws may frustrate the congressional purpose of uniform regulation reflected in the [NBA]." Id.
Additionally, allowing a statutory state-law claim for discrimination to proceed only to the extent it comports with Title VII "furthers the intent of Congress to establish a joint federal/state system for enforcing anti-discrimination laws." James v. Fed. Rsrv. Bank of N.Y. , 471 F. Supp. 2d 226, 236 (E.D.N.Y. 2007) (citing Shaw v. Delta Air Lines, Inc. , 463 U.S. 85, 102, 103 S.Ct. 2890, 77 L.Ed.2d 490 (1983) ). Whereas allowing a state common-law tort claim for wrongful discharge does not further Congress's intent, but rather frustrates it, as "[t]he original congressional intent behind the at-pleasure provision of the Bank Acts was to ensure the financial stability of the banking institutions by affording them the means to discharge employees who were felt to compromise an institution's integrity." Sharon A. Kahn & Brian McCarthy, At-Will Employment in the Banking Industry: Ripe for a Change , 17 Hofstra Lab. & Emp. L.J. 195, 215 (1999). The same reasoning applies to Plaintiff's state common-law claim for intentional interference with employment rights against Defendant Kazmi. Accordingly, because Plaintiff's state common-law claims for wrongful discharge and intentional interference with employment rights "stand[ ] as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress," they are preempted. English v. Gen. Elec. Co. , 496 U.S. 72, 79, 110 S.Ct. 2270, 110 L.Ed.2d 65 (1990). Consequently, to the extent Plaintiff's claim for civil conspiracy is based on either of these underlying claims, it must be dismissed. See Basic Chems., Inc. v. Benson , 251 N.W.2d 220, 233 (Iowa 1977) ("Civil conspiracy is not in itself actionable ....").
Moreover, even if Plaintiff's claim for wrongful discharge was not preempted, her claim would still fail because her amended petition does not identify which Iowa public policy was allegedly undermined by the termination of her employment for engagement in an unknown protected activity. See Fitzgerald v. Salsbury Chem., Inc. , 613 N.W.2d 275, 282 (Iowa 2000) ("[T]he employee must first identify a clear public policy which would be adversely impacted if dismissal resulted from the conduct engaged in by the employee.").
In sum, Plaintiff's claims under the ICRA (Counts I and III) survive to the extent they are not in conflict with Title VII. Plaintiff's state common-law claims for wrongful discharge and intentional interference with employment rights (Counts VIII and X) are dismissed.
As noted in Ewing , "[i]t is true that, since Plaintiff is entitled to no greater relief than that to which [s]he would be entitled under Title VII ..., it would certainly make sense for all involved for Plaintiff to assert [only her] Title VII ... claims, rather than to maintain h[er] ICRA claims. Plaintiff, however, is the master of h[er] own complaint and is not obligated to do what is easy; rather, [s]he may assert any legally cognizable claim as [s]he sees fit." 645 F. Supp. 2d at 721–22.
B. Failure to State a Claim to Relief
Defendants next argue the Court should dismiss Plaintiff's claims in Counts V through X based on Plaintiff's failure to plead sufficient facts to state a plausible claim to relief. Defendants contend Plaintiff's defamation/defamation-by-implication claim (Count V) must be dismissed because privilege shields FHLB from liability for federally mandated filings and because the alleged defamatory statement is true and not capable of a defamatory meaning. Next, Defendants argue Plaintiff's claim for false light invasion of privacy (Count VI) fails because the statement at issue is neither false nor highly offensive to a reasonable person and was merely a conveyance of information that was already subject to public disclosure. Regarding Plaintiff's state-law claim for blacklisting (Count VII), Defendants argue the claim must also fail because FHLB's conduct falls within the explicit exception under Iowa Code section 730.1 and because Plaintiff has not alleged that Defendants acted with the intent to injure her or communicated with any potential future employers. Furthermore, Defendants argue Plaintiff's blacklisting claim must be dismissed as to the individual Defendants because Iowa Code chapter 730 does not permit liability against individuals. Finally, with regard to Plaintiff's claim for civil conspiracy (Count IX) against the individual Defendants, Defendants argue the claim must fail because, after dismissing all the state-law claims, there would be no underlying tort claim remaining in this action to support it.
Because the Court determined above that Plaintiff's claims in Counts VIII and X are preempted, the Court need not examine whether Plaintiff has stated a claim for relief as to these claims.
1. Defamation
Under Iowa law, defamation is either written (libel) or spoken (slander). Huegerich v. IBP, Inc. , 547 N.W.2d 216, 221 (Iowa 1996). Here, Plaintiff's claim sounds in libel because it is based on an alleged defamatory writing. The Iowa Supreme Court defines "libel" as the "malicious publication, expressed either in printing or in writing, or by signs and pictures, tending to injure the reputation of another person or to expose [that person] to public hatred, contempt, or ridicule or to injure [that person] in the maintenance of [that person's] business.’ " Plendl v. Beuttler , 253 Iowa 259, 111 N.W.2d 669, 670–71 (1961).
"Iowa courts recognize two types of libel: ‘libel per se and libel per quod.’ " Doe v. Hagar , 765 F.3d 855, 860 (8th Cir. 2014) (quoting Schlegel v. Ottumwa Courier, Inc. , 585 N.W.2d 217, 222 (Iowa 1998) ). "A statement is libelous per se if it has ‘a natural tendency to provoke the plaintiff to wrath or expose him to public hatred, contempt, or ridicule, or to deprive him of the benefit of public confidence or social intercourse.’ " Johnson v. Nickerson , 542 N.W.2d 506, 510 (Iowa 1996) (quoting Prewitt v. Wilson , 128 Iowa 198, 103 N.W. 365, 367 (1905) ). "A statement is libelous per quod if it is necessary to refer to facts or circumstances beyond the words actually used to establish the defamation." Id. (citing 50 Am. Jur. 2d Libel and Slander § 146 (1995) ).
Here, Plaintiff alleges Defendants defamed her when Defendant FHLB filed a Form 8-K with the SEC, signed by Defendant Wilson, containing the following written statement:
On January 3, 2020 the Federal Home Loan Bank of Des Moines (the "Bank") provided a notice of termination of employment to Linda N. Betz, the Bank's current Chief Information Security Officer ("CISO"). The effective date of Ms. Betz's separation from the Bank will be January 24, 2020. Ms. Betz served as the Bank's CISO since March 2018.
ECF No. 1-11 ¶¶ 98, 99. Plaintiff alleges that FHLB's failure to include in the written statement that her termination from employment was "without cause," as had been included in the Form 8-Ks filed in relation to the termination of at least three male executives within six to seven months of Plaintiff's firing, implied that her employment termination was with cause. Id. ¶¶ 100, 101. Plaintiff alleges such failure implied that she was incompetent as an information security executive, and thus the statement—or lack thereof—injured and attacked her professional reputation. Id. ¶¶ 102, 103. Plaintiff further alleges "Defendants have also made additional slanderous and libelous statements regarding Plaintiff's ability to perform her job or surrounding the circumstances of her termination, which include, but are not limited to statements made to the Bank's regulator, the Federal Housing Finance Agency." Id. ¶ 105.
Plaintiff does not identify any additional statements, written or oral, that were allegedly made by any Defendant. Her claim for defamation as to these unidentified statements is dismissed because she fails to plead any facts to state a claim upon which relief can be granted. See Freeman v. Bechtel Constr. Co. , 87 F.3d 1029, 1032 (8th Cir. 1996) (affirming dismissal of a slander claim where the allegations did "not identify the defamatory statements with any specificity, [did] not identify the manner of oral publication, and [did] not allege that [any agent of the defendant's acting within the scope of employment] published the statements to a non[-]privileged recipient" (alterations in original)).
In Iowa, libel per se cases generally involve accusations of dishonesty, see Wilson v. IBP, Inc. , 558 N.W.2d 132, 139 (Iowa 1996), committing a crime of moral turpitude, see Rees v. O'Malley , 461 N.W.2d 833, 835 (Iowa 1990), or immorality, see Vinson v. Linn-Mar Cmty. Sch. Dist. , 360 N.W.2d 108, 116 (Iowa 1984). But Iowa extends this category to defamatory statements involving a trade, business, profession, or office. See Lara v. Thomas , 512 N.W.2d 777, 785 (Iowa 1994) ; see also Vojak v. Jensen , 161 N.W.2d 100, 105 (Iowa 1968) abrogated in part on other grounds by Barreca v. Nickolas , 683 N.W.2d 111, 119–21 (Iowa 2004) ("Among statements which are libelous per se are those which charge business incompetence or lack of skill in the trade, occupation, profession or office by which one earns [her] living."). Here, Plaintiff pleads her claim as one of libel per se. ECF No. 1-11 at 15. She alleges the defamatory statement "dealt with [her] competency as an information security executive" and "attacked [her] ability in her occupation as an information security executive." ECF No. 1-11 ¶¶ 102, 103. Therefore, the Court agrees Plaintiff's claim for defamation is one of libel per se.
Plaintiff's claim, however, does not allege that Defendants’ statement to the SEC explicitly defamed her. Rather, Plaintiff alleges the statement "implied that her termination was for cause." ECF No. 1-11 ¶ 101 (emphasis added). Under Iowa law, defamation by implication arises not from what is stated, but from what is implied. See Stevens v. Iowa Newspapers, Inc. , 728 N.W.2d 823, 828 (Iowa 2007) (adopting the principle of defamation by implication); see also Armstrong v. Simon & Schuster, Inc. , 85 N.Y.2d 373, 625 N.Y.S.2d 477, 649 N.E.2d 825, 829 (1995) (" ‘Defamation by implication’ is premised not on direct statements but on false suggestions, impressions and implications arising from otherwise truthful statements."). Defamation by implication thus arises when a defendant "creates a defamatory implication by omitting facts, [such that] he may be held responsible for the defamatory implication, unless it qualifies as an opinion, even though the particular facts are correct." Id. , 625 N.Y.S.2d 477, 649 N.E.2d at 827 (alteration in original) (quoting Dan B. Dobbs, Prosser & Keeton on the Law of Torts § 116, at 117 (Supp. 1988)). "Thus, the touchstone of implied defamation claims is ... the material omission of facts that would render the challenged statements(s) non-defamatory." Toney v. WCCO Television, Midwest Cable & Satellite, Inc. , 85 F.3d 383, 387 (8th Cir. 1996).
Generally, a claim of defamation by implication requires a plaintiff to establish the same elements as a claim of libel. See Iowa Civ. Jury Instr. 2100.4 cmt. (Iowa State Bar Ass'n 2018) (noting that the libel-by-implication instruction "should be given with an appropriate marshalling instruction" for defamation per se or per quod). "To establish a prima facie case in any defamat[ion] action, a plaintiff must show the defendant (1) published a statement that was (2) defamatory (3) of and concerning the plaintiff." Bierman v. Weier , 826 N.W.2d 436, 443, 444 (Iowa 2013) (alteration in original) (quoting Taggart v. Drake Univ. , 549 N.W.2d 796, 802 (Iowa 1996) ). Additionally, Plaintiff must prove that Defendants created a defamatory implication by omitting a material fact. See Stevens , 728 N.W.2d at 827 ; see Iowa Civ. Jury Instr. 2100.4 (requiring the plaintiff to "prove that defendant left out facts ... in a way that intentionally conveyed a false meaning").
In a case of libel per quod, a plaintiff is also required to establish the elements of falsity, malice, and injury. See Huegerich , 547 N.W.2d at 221.
Defendants do not dispute Plaintiff has sufficiently pleaded the elements of publication and whether the statement was about Plaintiff. Rather, Defendants contend the statement contained with the Form 8-K was privileged and incapable of a defamatory meaning. Defendants also contend Plaintiff's claim fails because the statement was true and she cannot prove malice. As noted above, because this action involves a claim of libel per se, Plaintiff need not prove the disputed elements of malice, falsity, or injury.
a. Privilege
The Court will first examine whether the statement at issue is privileged. See Robinson v. Home Fire & Marine Ins. Co. , 242 Iowa 1120, 49 N.W.2d 521, 524 (1951). Iowa courts recognize "two types of privileged communications: those that are absolutely privileged and those that are qualifiedly or conditionally privileged." Taggart , 549 N.W.2d at 803. "Absolute privilege affords a complete defense under any circumstances, even if actual malice is shown, while qualified privilege provides immunity in some but not all instances." Id.
Defendants assert an absolute privilege applies here because they were required by law to file the Form 8-K with the SEC notifying it of Plaintiff's employment termination. See Restatement (Second) of Torts § 592A (Am. Law Inst. 1977) ("One who is required by law to publish defamatory matter is absolutely privileged to publish it."). The Court looks to Iowa law to determine whether a defense of privilege applies. See Davidson v. Cannon , 474 U.S. 344, 359, 106 S.Ct. 668, 88 L.Ed.2d 677 (1986) ("A State can define defenses, including immunities, to state-law causes of action, as long as the state rule does not conflict with federal law."). "Iowa law recognizes an absolute privilege (or immunity) from liability for defamation which takes place in a judicial proceeding." Spencer v. Spencer , 479 N.W.2d 293, 295 (Iowa 1991) (citing Robinson , 49 N.W.2d at 524–27 ; Restatement (Second) of Torts § 586 – 88 ; W. Prosser & W. Keeton, Prosser & Keeton on Torts § 114, 115 (5th ed. 1984)). The privilege generally extends to communications made in quasi-judicial proceedings as well. Kennedy v. Zimmermann , 601 N.W.2d 61, 65 (Iowa 1999). Iowa courts have cautioned, however, that absolute privilege "is and must be restricted to narrow and well-defined limits," including "cases in which the public service or the administration of justice require complete immunity, to legislatures in debate, judges and attorneys in the preparation and trial of cases, and in executive and military personnel within the duties of their offices." Mills v. Denny , 245 Iowa 584, 63 N.W.2d 222, 224–25 (1954).
Defendants acknowledge that Iowa courts have not adopted the Restatement's § 592A, yet nevertheless urge the Court to find that absolute privilege applies in this case. Defendants rely on nonbinding authority to argue that statements contained in mandatory SEC filings are absolutely privileged. In Rosenberg v. Metlife, Inc. , New York's highest court held that statements made in an employee termination notice (Form U-5) to the National Association of Securities Dealers (NASD), a quasi-governmental entity subject to SEC oversight and tasked with investigating and adjudicating suspected violations of the laws and regulations of the SEC, were absolutely privileged. 8 N.Y.3d 359, 834 N.Y.S.2d 494, 866 N.E.2d 439, 444 (2007). The court noted the NASD's investigative and adjudicative responsibilities constituted a quasi-judicial process in which "[t]he Form U-5 play[ed] a significant role." Id. The court further noted that, "[u]pon receipt of the Form U-5, the NASD routinely investigates terminations for cause to determine whether the representative violated any securities rules." Id. Thus, the court observed, "the compulsory Form U-5 can be viewed as a preliminary or first step in the NASD's quasi-judicial process." Id. The court also noted the filing of a Form U-5 served an important public-interest role as "[t]he form is designed to alert the NASD to potential misconduct and, in turn, enable the NASD to investigate, sanction and deter misconduct by its registered representatives." Id. It was the Form U-5's important role in protecting the public's interest together with its "compulsory nature and its role in the NASD's quasi-judicial process" that led the court "to conclude that statements made by an employer on the [Form U-5] should be subject to an absolute privilege." Id.
Similarly, in Carnegie International Corp. v. Grant Thornton, LLP , a state trial court in Maryland "weigh[ed] the public function served by the SEC," and in particular, "the purpose(s) served by the 8-K Form, against the harm suffered by the Plaintiffs resulting from any defamatory statements." No. 24-C-00-002639, 2006 WL 990960, at *3 (Md. Cir. Ct. Mar. 30, 2006). The court noted "[t]he SEC's reporting requirement is designed to provide investors with the information necessary to make informed decisions, and provides the SEC with a basis to police the actions of companies subject to the requirement." Id. (quoting Abella v. Barringer Res., Inc. , 260 N.J.Super. 92, 615 A.2d 288, 293 (N.J. Super. Ct. Ch. Div. 1992) ). The court noted that, in that particular case, the issue involved a "disagreement[ ] with the former accountant" in which the accountant stated he was unable "to rely on management's representations"—both of which were required disclosures in the Form 8-K. Id. at *4. Given the interest in protecting the public, an accountant is required to respond to the Form 8-K and state whether or not he agrees with the statements contained within the Form. Id. In that case, it was the statements made within the accountant's response to the Form 8-K that were alleged defamatory and that the court determined were "precisely those [e]licited" in requiring the disclosure of a dismissal of an accountant. Id. The court held that, "[b]ecause ... the SEC functions in great part to ensure that investors can make informed investment decisions and has determined that a change in accountants is material to those decisions, ... an accountant's 8-K response letter plays an integral and essential role in the SEC's public function in protecting the investing public." Id. The court ultimately concluded that, because the accountant was required by law to make the particular statement at issue—that it could "no longer ... rely on management's representations," 17 C.F.R. § 229.304(a)(1)(v)(B) —and because the accountant's response "could have triggered an SEC investigation with a subsequent proceeding should the SEC have determined that disciplinary action was warranted," in combination with the presence of multiple procedural safeguards, the published statement was absolutely privileged. Id. at *7–9.
Nevertheless, the Court believes the correct approach to determining whether the alleged defamatory statement contained within the Form 8-K filed in this case is absolutely privileged is the one taken in Fischkoff v. Iovance Biotherapeutics, Inc. , 339 F. Supp. 3d 383 (S.D.N.Y. 2018). In Fischkoff , the court considered whether a defense of absolute privilege—described by the New York Court of Appeals as one "generally ... reserved for communications made by individuals participating in a public function, such as executive, legislative, judicial or quasi-judicial proceedings"—applied to cover statements made in a Form 10-K filed with the SEC. 339 F. Supp. 3d at 387. The court distinguished Rosenberg and held that because the pleadings were "devoid of any allegations that forms 10-K and 10-Q form part of an SEC ‘quasi-judicial process,’ ... the foundation for the absolute privilege doctrine ... [wa]s lacking." Id. at 388.
The same is true here. Nothing in the pleadings or Defendants’ brief in support of its motion to dismiss suggests the Form 8-K filed in this case was a "preliminary or first step in the [SEC]’s quasi-judicial process." Id. (quoting Rosenberg , 834 N.Y.S.2d 494, 866 N.E.2d at 444 ); see also id. at 389 ("[T]he issue is not whether the SEC or some division within it performs adjudicative functions but whether the filing of the Form 10-K or Form 10-Q alleged in the complaint were part of a quasi-judicial proceeding before the SEC."). Nor is there any suggestion that the filing of the form in this case triggered an SEC investigation. See id. at 390 ; Carnegie Int'l Corp. , 2006 WL 990960, at *7. Thus, in keeping with the Iowa Supreme Court's direction to strictly confine the use of absolute privilege, Mills , 63 N.W.2d at 224, the Court declines to apply an absolute privilege to the statement made in the Form 8-K filed with the SEC in this case.
Next, the Court considers Defendants’ argument that a qualified privilege applies to the statement regarding Plaintiff's employment termination in the Form 8-K. See Robinson , 49 N.W.2d at 524. "Qualified privilege is an affirmative defense that must be pleaded and proved." Vinson , 360 N.W.2d at 116. Iowa requires a defendant who claims a qualified privilege to prove "(1) the statement was made in good faith, (2) the defendant had an interest to uphold, (3) the scope of the statement was limited to the identified interest, and (4) the statement was published on a proper occasion, in a proper manner, and to proper parties only." Theisen v. Covenant Med. Ctr., Inc. , 636 N.W.2d 74, 84 (Iowa 2001) (citing Thompto v. Coborn's Inc. , 871 F. Supp. 1097, 1126 (N.D. Iowa 1994) ). A defendant who abuses the privilege forfeits it. Barreca , 683 N.W.2d at 117. Publication with actual malice constitutes such abuse. Id. at 118. "[T]he question of whether a qualified privilege is abused is ordinarily a matter for the jury ...." Id. at 119.
To make a determination on qualified privilege at this stage of the proceedings would require the Court to engage in speculation. Defendants may ultimately be able to prove they are entitled to a qualified privilege for the alleged defamatory statement, but they have not yet established the defense based on the record before the Court. See Speed v. Nw. Airline, Inc. , No. C00-82MJM, 2000 WL 34030833, at *9–10 (N.D. Iowa Dec. 1, 2000). Nevertheless, as explained below, Plaintiff's claim for defamation fails for another reason.
b. Defamatory Statement
Next, the Court examines whether Plaintiff has sufficiently pleaded a prima facie case for libel per se. In doing so, the Court must "decide whether the challenged statement is ‘capable of bearing a particular meaning, and whether that meaning is defamatory.’ " Yates v. Iowa W. Racing Ass'n , 721 N.W.2d 762, 771–72 (Iowa 2006) (quoting Restatement (Second) of Torts § 614(1) ). In a defamation-by-implication case, "the judge's task is to determine whether the implication the plaintiff alleges is among the implications that the objectively reasonable reader would draw." Dall. Morning News, Inc. v. Tatum , 554 S.W.3d 614, 631 (Tex. 2018). "In carrying out this task, a court should not, however, ‘indulge far-fetched interpretations of the challenged publication. The statements at issue "should ... be construed as the average or common mind would naturally understand [them]." ’ " Yates , 721 N.W.2d at 772 (alteration in original) (citation omitted). "[C]ourts must be vigilant not to allow an implied defamatory meaning to be manufactured from words not reasonably capable of sustaining such meaning." White v. Fraternal Order of Police , 909 F.2d 512, 519 (D.C. Cir. 1990). It is the jury's duty to determine whether a defendant's words actually had a defamatory effect on the reader. Stevens , 728 N.W.2d at 831.
Plaintiff's amended petition alleges only that the statement was defamatory per se and does not plead that the statement was extrinsically defamatory. Therefore, the Court limits its inquiry to whether the language of the statement itself—or rather, the omission of the words "without cause"—is capable of a defamatory meaning. See Chehab v. Edgewood Dev., Ltd. , 619 S.W.3d 828, 835 (Tex. App. 2021).
Plaintiff titles Count V as "Defamation/Defamation by Implication, Defamation Per Se." ECF No. 1-11 at 15. The Court notes Plaintiff's amended petition references extrinsic evidence relating to three male executives for whom Defendant FHLB included "without cause" in their respective Form 8-Ks. ECF No. 1-11 ¶ 100. Plaintiff also alleges malice and injury/damages, id. ¶¶ 103, 104, 106–08, which are elements a plaintiff is not required to prove in an action for defamation per se. Still, in her Response to Defendants’ Motion to Dismiss, Plaintiff argues only that she has sufficiently stated a claim of "defamation/libel per se." ECF No. 26 at 17.
The statement at issue reads,
On January 3, 2020 the Federal Home Loan Bank of Des Moines (the "Bank") provided a notice of termination of employment to Linda N. Betz, the Bank's current Chief Information Security Officer ("CISO"). The effective date of Ms. Betz's separation from the Bank will be January 24, 2020. Ms. Betz served as the Bank's CISO since March 2018.
ECF No. 1-11 ¶¶ 98, 99. Plaintiff asserts "[t]he Bank's failure to note that Plaintiff's termination was ‘without cause’ implied that her termination was for cause." ECF No. 1-11 ¶ 101.
"[T]he court must first examine what defamatory inferences might reasonably be drawn from a materially true communication." White , 909 F.2d at 520. In so doing, the Court considers the context in which the statement was made. See id. at 526 ; Restatement (Second) of Torts § 614 cmt. d. Federal law requires institutions like Defendant FHLB to file notices to the SEC of the departure of their officers. See 17 C.F.R. § 240.13a-11. That is what occurred here. Based on the language in this statement alone, the Court concludes the objectively reasonable reader, reading this statement and nothing else, would not draw the implication that Plaintiff's employment termination was for cause. See Dall. Morning News, Inc. , 554 S.W.3d at 637 ("The standard is whether an objectively reasonable reader would draw the implication that [Plaintiff] allege[s]."); cf. Memphis Pub'g Co. v. Nichols , 569 S.W.2d 412, 419 (Tenn. 1978) (finding a defamatory meaning from the "clear implication" of the text standing alone). Thus, the Court concludes the challenged statement is not capable of bearing the meaning that Plaintiff ascribes to it. See Restatement (Second) of Torts § 614 cmt. b.
Accordingly, because Plaintiff cannot establish that the challenged statement is capable of a defamatory meaning, her claim for defamation (Count V) must fail.
2. False Light Invasion of Privacy
Defendants next argue Plaintiff's claim for false light invasion of privacy must be dismissed because Plaintiff cannot show the challenged statement was untrue. The Iowa Supreme Court has "adopted the elements of false light invasion of privacy as set forth in the Restatement (Second) of Torts § 652E." Willson v. City of Des Moines , 386 N.W.2d 76, 83 n.8 (Iowa 1986). This court has previously explained the essential elements of a claim for false light invasion of privacy under Iowa law, as follows:
[Plaintiff] must demonstrate that: (1) Defendants gave publicity to a matter concerning [Plaintiff] that placed [her] before the public in a false light; (2) the false light [Plaintiff] was placed in would be highly offensive to a reasonable person; and (3) Defendants had knowledge or acted in reckless disregard as to the falsity of the publicized matter and the false light in which [Plaintiff] was placed.
Mills v. Iowa , 924 F. Supp. 2d 1016, 1035 (S.D. Iowa 2013) ; see Winegard v. Larsen , 260 N.W.2d 816, 823 (Iowa 1977) ; Restatement (Second) of Torts § 652E ; see also Willson , 386 N.W.2d at 83 n.8 ("A claim for false light invasion of privacy is based upon an untruthful publication which places a person before the public in a manner that would be highly offensive to a reasonable person."). "The essential element of untruthfulness differentiates ‘false light’ from the other forms of invasion of privacy and many times affords an alternate remedy for defamation even though it is not necessary for a plaintiff to prove that he or she was defamed." Anderson v. Low Rent Hous. Comm'n of Muscatine , 304 N.W.2d 239, 248 (Iowa 1981).
Plaintiff premises her claim for false light invasion of privacy on the statement submitted to the SEC in the Form 8-K filing discussed above:
On January 3, 2020 the Federal Home Loan Bank of Des Moines (the "Bank") provided a notice of termination of employment to Linda N. Betz, the Bank's current Chief Information Security Officer ("CISO"). The effective date of Ms. Betz's separation from the Bank will be January 24, 2020. Ms. Betz served as the Bank's CISO since March 2018.
ECF No. 1-11 ¶ 110. Plaintiff asserts that "Defendants cast Plaintiff in a ‘false light before the public’ by implying that her termination was for cause." ECF No. 26 at 19.
Nowhere in the pleadings does Plaintiff allege that the statement submitted to the SEC was untrue. In fact, in her Response to Defendants’ Motion, Plaintiff admits the statement "was technically true." ECF No. 26 at 17. Furthermore, Plaintiff has failed to allege that the light she "was placed in would be highly offensive to a reasonable person." Mills , 924 F. Supp. 2d at 1035. Because Plaintiff has failed to state a claim upon which relief can be granted, her claim for false light invasion of privacy (Count VI) is dismissed.
3. Blacklisting
In Count VII, Plaintiff alleges a claim for blacklisting under Iowa Code chapter 730. Under Iowa law, an employer is liable if it "blacklist[s] any discharged employee, or attempt[s] by word or writing or any other means whatever to prevent such discharged employee ... from obtaining employment with any other person or company." Iowa Code § 730.2. In Glenn v. Diabetes Treatment Centers of America, Inc. , another judge in this District read Iowa Code section 730.1, which is a criminal statute, together with section 730.2, which provides for treble damages, to frame the elements of a civil cause of action for blacklisting. 116 F. Supp. 2d 1098 (S.D. Iowa 2000). To state a claim for blacklisting, Judge Walters held,
[a] plaintiff must prove: (1) the defendant discharged plaintiff; (2) thereafter, by word, writing or other means the defendant prevented or attempted to prevent the plaintiff from obtaining other employment; (3) defendant acted with the predominant purpose of preventing plaintiff from obtaining future employment; and (4) defendant's conduct was a proximate cause of damage to plaintiff.
Id. at 1103–04 ; see Conrad v. Iowa Cent. Cmty. Coll. , No. 07-0818, 2008 WL 2746324, at *4 (Iowa Ct. App. July 16, 2008) (citing the elements framed in Glenn ).
Defendants argue Plaintiff cannot state a claim for blacklisting because she has failed to allege that Defendants acted with the intent to injure or punish her by preventing her from obtaining future employment. Defendants contend the predominant purpose of filing the Form 8-K to the SEC with the challenged statement was to comply with federal law, not to prevent Plaintiff from obtaining future employment. Defendants further argue Plaintiff's claim fails because the challenged statement was not communicated to a potential future employer of Plaintiff. Finally, Defendants argue Plaintiff's claim fails because Defendant FHLB's actions fall within the statute's explicit exception because FHLB "furnish[ed] in writing" pursuant to federal regulations, "a truthful statement as to [Plaintiff]’s discharge." Iowa Code § 730.1.
Plaintiff alleges that after discharging her, Defendants "by word, writing, or other means ... prevented or attempted to prevent Plaintiff from obtaining other employment." ECF No. 1-11 ¶¶ 118, 119. Plaintiff also alleges, "Defendants knew or should have known their actions would prevent Plaintiff from obtaining future employment, future comparable employment, or future employment in her practiced field." Id. ¶ 120. Finally, Plaintiff alleges she has suffered and will continue to "suffer mental and emotional harm, anguish, humiliation, embarrassment, lost wages and benefits, and lost earning capacity." Id. ¶ 121.
Plaintiff has failed to plead sufficient factual allegations to state a claim to relief that is plausible on its face. Plaintiff has surely pleaded that she was discharged from her employment with FHLB but has failed to plead any facts establishing the remaining three elements. Instead, she "merely pleads ‘labels and conclusions ... devoid of factual enhancement." Hamilton , 621 F.3d at 817–18 (quoting Iqbal , 556 U.S. at 678, 129 S.Ct. 1937 ). Such allegations are not enough to survive a motion to dismiss. Plaintiff's claim for blacklisting (Count VII) is dismissed.
4. Civil Conspiracy
"Civil conspiracy is not in itself actionable ...." Basic Chems., Inc. , 251 N.W.2d at 233. Rather, it allows recovery when multiple actors work in concert to cause a tort. See id. ; Iowa Civ. Jury Instr. 3500.1. Here, Plaintiff alleges Defendants Kazmi, Mohandas, and Wilson conspired to "intentionally and improperly interfere in the employment relationship existing between Plaintiff and FHLB-Des Moines and to make false and/or defamatory statements regarding Plaintiff and/or to cast Plaintiff in a false light." ECF No. 1-11 ¶ 131. Because Plaintiff's claims for intentional interference with her employment rights, defamation, and false light invasion of privacy fail, Plaintiff's claim for civil conspiracy (Count IX) must also be dismissed. See Basic Chems., Inc. , 251 N.W.2d at 233.
IV. CONCLUSION
Defendants’ Motion to Dismiss (ECF No. 6) is GRANTED IN PART AND DENIED IN PART. Plaintiff's claims under the ICRA (Counts I and III) are preempted to the extent they conflict with federal law and survive to the extent they are not in conflict with Title VII. Plaintiff's state common-law claims for intentional interference with employment rights (Count VIII) and wrongful discharge in violation of public policy (Count X) are dismissed because they are preempted by federal law. Plaintiff's additional state-law claims for defamation (Count V), false light invasion of privacy (Count VI), blacklisting (Count VII), and civil conspiracy (Count IX) are dismissed for failure to state a claim upon which relief can be granted.
IT IS SO ORDERED.