Opinion ID: 1937123
Heading Depth: 1
Heading Rank: 4

Heading: Background and Underlying Principles.

Text: Subject matter jurisdiction `is the power to hear and determine cases of the general class to which the proceedings belong.' Shirley v. Pothast, 508 N.W.2d 712, 714 (Iowa 1993) (citation omitted). Through its adoption of Iowa Code chapter 85, the legislature removed from the district court's general, original jurisdiction, the power to hear claims involving the `rights and remedies of an injured employee against an employer for industrial injuries' and placed them within the exclusive jurisdictional purview of the [commissioner]. Id. at 715 (citation omitted). Thus, subject matter jurisdiction over workers' compensation claims is vested in the commissioner subject to any further circumscription by the legislature. See id. at 714-15. One example of such circumscription is Iowa Code section 85.71, which governs the [commissioner's] subject matter jurisdiction over workers' compensation claims based on injuries sustained outside the state. [3] Heartland Express, Inc. v. Terry, 631 N.W.2d 260, 265 (Iowa 2001); see also George H. Wentz, Inc. v. Sabasta, 337 N.W.2d 495, 500 (Iowa 1983) (The purpose of Iowa Code section 85.71 is to identify those employees who are entitled to benefits under the Iowa act despite occurrence of an injury out of state.). Prior to the adoption of section 85.71, workers' compensation claimants who had been hired in Iowa could file for benefits in Iowa even if they were injured outside of Iowa. See Harry W. Dahl, The Iowa Workmen's Compensation Law and Federal Recommendations, 24 Drake L.Rev. 336, 351-52 (1975) (citing Haverly v. Union Constr. Co., 236 Iowa 278, 284-90, 18 N.W.2d 629, 633-36 (1945)). However, while Iowa jurisdiction could be invoked based on the sole factor of hiring, many other states' laws were more restrictive in extending jurisdiction over a claimant's claim for benefits arising from an extraterritorial injury. See The Council of State Governments, Workmen's Compensation & Rehabilitation Law § 7 cmt. at 97-98 (1973) [hereinafter Model Act]. For this reason, some workers' compensation claimants injured outside of the territorial limits of their home state found themselves unable to bring a claim for benefits in any state. See id. This inequitable result moved the National Commission on State Workmen's Compensation Laws to recommend that an employee or his survivor be given the choice of filing a workmen's compensation claim in the State where the injury or death occurred, or where the employment was principally localized, or where the employee was hired. The Report of the Nat'l Comm'n on State Workmen's Compensation Laws R2.11, at 48 (1972). Not long after this recommendation was made, the Council of State Governments proposed a model workers' compensation statutory provision to ensure that [the] tragedy of complete failure of coverage cannot possibly take place. Model Act § 7 cmt. at 98. This provision provided for extraterritorial jurisdiction as long as one of four jurisdictional prerequisites was satisfied: [A]n employee suffering an out-of-state injury may recover under this act if his employment is principally localized in this state, or he is working under a contract for hire made in this state in employment not principally localized in any state or he is working under a contract of hire made in this state in employment principally localized in another state whose workmen's compensation law is not applicable to his employer or he is working under a contract of hire made in this state for employment outside the United States or Canada. Id. Although Iowa jurisdiction previously had been interpreted broadly, our legislature chose to add the Council of State Governments' model language in 1973. 1973 Iowa Acts ch. 144, § 29; see also George H. Wentz,Inc., 337 N.W.2d at 500 (Iowa Code section 85.71 is based on language found in section 7 of the [Model Act].). In doing so, the legislature incorporated only a portion of the Model Act's definition of the term principally localized. See 1973 Iowa Acts ch. 144, § 29. The Model Act definition of principally localized provided: A person's employment is principally localized in this or another state when (1) his employer has a place of business in this or such other state and he regularly works at or from such place of business, or (2) if clause (1) foregoing is not applicable, he is domiciled and spends a substantial part of his working time in the service of his employer in this or such other state[.] Model Act § 7(d)(4). The legislature defined principally localized as requiring that [the employee's] employer has a place of business in this or some other state and [the employee] regularly works in this state, or if [the employee] is domiciled in this state. 1973 Iowa Acts ch. 144, § 29. Importantly, the legislature chose not to include in this definition the further model language under the second (domicile) clause that permitted an employee to establish principal localizationand thus jurisdictionif he could show he was domiciled in the state and spent a substantial part of his working time in the service of his employer in this or such other state. Model Act § 7(d)(4). The main controversy in this appeal arises as a result of a 1997 amendment to section 85.71. See 1997 Iowa Acts ch. 106, § 1. This amendment came shortly after our decision in Henriksen v. Younglove Construction, 540 N.W.2d 254 (Iowa 1995). In Henriksen, we reconsidered our prior interpretations of section 85.71(1), in which we had determined that that subsection required a meaningful relationship between the employee's domicile in Iowa and the employment relationship to establish subject matter jurisdiction in Iowa. Id. at 258; see also George H. Wentz, Inc., 337 N.W.2d at 500-02; Iowa Beef Processors, Inc. v. Miller, 312 N.W.2d 530, 533-34 (Iowa 1981). After looking to the plain language of the statute and noting the legislature's failure to include the Model Act language requiring a more extensive relationship, we concluded, [s]ection 85.71 on its face clearly permits domicile as an independent basis for subject matter jurisdiction. Henriksen, 540 N.W.2d at 258. Not long after this decision, the legislature amended section 85.71: Section 1. Section 85.71, Code 1997, is amended to read as follows: 85.71 EMPLOYMENT INJURY OUTSIDE OF STATE. If any employee, while working outside the territorial limits of this state, suffers an injury on account of which the employee ... would have been entitled to the benefits provided by this chapter had such injury occurred within this state, such employee ... shall be entitled to the benefits provided by this chapter, provided that if at the time of such injury any of the following is applicable: 1. The employment is principally localized in this state, that is, the employee's employer has a place of business in this or some other state and the employee regularly works in this state, or if the employee's employer has a place of business in this state and the employee is domiciled in this state , or. 2. The employee is working under a contract of hire made in this state in employment not principally localized in any state , or and the employee spends a substantial part of the employee's working time working for the employer in this state. 3. The employee is working under a contract of hire made in this state in employment principally localized in another state, whose workers' compensation law is not applicable to the employee's employer , or. 4. The employee is working under a contract of hire made in this state for employment outside the United States.... Approved May 2, 1997 [(effective July 1, 1997)] 1997 Iowa Acts ch. 106, § 1; see also Iowa Code § 3.7(1) (1999) (providing the effective date for legislation that does not otherwise specify an effective date). Although this amendment had clear ramifications for the application of subsection (1), the legislature's addition of language to subsection (2) also substantially altered the required prerequisites for subject matter jurisdiction under that subsection. In fact, it is the effect of the amendment to subsection (2) that is directly at issue in this case. Gardner characterizes the main controversy in this appeal as involving a question of retroactive application of Iowa Code section 85.71(2). He argues that the pre-amendment form of section 85.71(2) applies to his claim for workers' compensation benefits given it was in effect at the time he was injured in 1994. As a corollary to this argument, Gardner asserts that the commissioner properly found that it had subject matter jurisdiction over his claim under subsection (2) of the statute because his contract for hire was made in Iowa and his employment was not principally localized in any state. See Iowa Code § 85.71(2) (1993). Heartland contends that the post-amendment form of section 85.71(2) applies because the amendment should be applied prospectively, not retrospectively. See Iowa Code § 85.71(2) (1999). It further argues that Gardner seeks to create a question of retroactive applicability where none exists. Instead, Heartland points to the timing of the filing of Gardner's petition for Iowa workers' compensation benefits, which, it points out, came over eighteen months after the statutory amendment became effective. Based on this timing, Heartland argues the post-amendment statute applies due to the fundamental prerequisite that subject matter jurisdiction exist before a tribunal takes any action in a particular case. Ultimately, the claims asserted by the parties require us to consider two interrelated issues pertaining to the commissioner's subject matter jurisdiction. First, we must decide which version of section 85.71(2) applies to Gardner's cause of action: the pre-amendment version that existed at the time of his injury or the post-amendment version that existed at the time his petition for workers' compensation benefits was filed. Second, we must determine whether Gardner's claim for benefits falls within the commissioner's jurisdiction under the appropriate version of section 85.71(2). 2. Which Version of Section 85.71(2) Applies? Several fundamental principles related to subject matter jurisdiction guide our determination of the first issue. We launch from the premise that jurisdiction [must] be established as a threshold matter, a requirement that `spring[s] from the nature and limits of the judicial power'... and is `inflexible and without exception.' Steel Co. v. Citizens for a Better Env't, 523 U.S. 83, 94-95, 118 S.Ct. 1003, 1012, 140 L.Ed.2d 210, 227 (1998). For this reason, a court without subject matter jurisdiction over a particular area `cannot proceed at all in any cause.' Id. at 94, 118 S.Ct. at 1012, 140 L.Ed.2d at 227 (quoting Ex parte McCardle, 74 U.S. (7 Wall.) 506, 514, 19 L.Ed. 264, 265 (1869)). The fundamental nature of subject matter jurisdiction makes the issue an abstract inquiry unrelated and precedent to the rights of the parties to a particular case. In re Guardianship of Matejski, 419 N.W.2d 576, 579 (Iowa 1988) (emphasis added). Courts have long recognized that `the jurisdiction of the [c]ourt depends upon the state of things at the time of the action brought.' Keene Corp. v. United States, 508 U.S. 200, 207, 113 S.Ct. 2035, 2040, 124 L.Ed.2d 118, 127-28 (1993) (collecting cases and quoting Mollan v. Torrance, 22 U.S. (9 Wheat.) 537, 539, 6 L.Ed. 154, 155 (1824)); Powell v. Khodari-Intergreen Co., 303 N.W.2d 171, 172 (Iowa 1981); see also Minneapolis & St. Louis R.R. v. Peoria & Pekin Union Ry., 270 U.S. 580, 586, 46 S.Ct. 402, 405, 70 L.Ed. 743, 746 (1926); Anderson v. Watt, 138 U.S. 694, 702-03, 11 S.Ct. 449, 451, 34 L.Ed. 1078, 1081 (1891); Secrest v. Simonet, 708 P.2d 803, 807 (Colo.1985); Davis v. Davis, 799 S.W.2d 127, 131 (Mo.Ct.App. 1990); Travelers Indem. Co. v. Montelongo, 785 S.W.2d 436, 438 (Texas Ct.App. 1990). Although this principle is often applied in light of the parties' statusmost often in light of their domicile or a change in that domicilethis state of things also includes and requires an application of the jurisdictional law at the time the suit is filed. See In re Lewis, 45 B.R. 27, 30 (Bankr.W.D.Mo.1984); In re Quinn, 44 B.R. 622, 625 (Bankr.W.D.Mo.1984); Guy v. Am. Fed'n of Gov't Employees, No. 71 (No. 2501), 1987 WL 5168, at  (Tenn.Ct. App. Jan. 9, 1987). Ultimately, because subject matter jurisdiction goes to the core of the judicial power, it must exist in light of the law pertaining to subject matter jurisdiction at the time that judicial power is exercised. See Steel Co., 523 U.S. at 94, 118 S.Ct. at 1012, 140 L.Ed.2d at 227. Gardner contends the commissioner correctly invoked the subject matter jurisdiction statute in place at the time of his injury. Yet, at the time of his injury, the commissioner had not been asked to exercise its judicial authority. Only at the time he filed his claimwhich was after the amendment to section 85.71(2)was the commissioner called upon to exercise its authority. It was at that point that the commissioner was required to look inward to determine whether subject matter jurisdiction existed under the law related to its jurisdiction as it stood at that time. See Bailey v. Batchelder, 576 N.W.2d 334, 337-38 (Iowa 1998). When the commissioner did otherwiselooking back and assuming jurisdiction based on 1994 lawit focused on the parties' status predominantly to determine whether it conferred jurisdiction. Yet, jurisdiction cannot be conferred based on the parties' status alone; it is a statutory and constitutional inquiry. See Smith v. Smith, 646 N.W.2d 412, 414-15 (Iowa 2002); see also Matejski, 419 N.W.2d at 579. The commissioner's subject matter jurisdiction must be considered in light of the law at the time the suit was filed, which included the amendment to section 85.71(2). 3. Applying the Post-Amendment Version of Section 85.71(2). We must next determine whether Gardner [was] working under a contract of hire made in this state in employment not principally localized in any state and spent a substantial part of [his] working time working for the employer in this state. Iowa Code § 85.71(2) (emphasis added). Both parties seemingly concede that Gardner work[ed] under a contract of hire made in Iowa and his employment was not principally localized in any state. Id. Presumably, the latter fact is established by evidence that Gardner's actual transportation work for Heartland took him to approximately forty states and he spent no more or less time in any one state. Heartland uses this evidence to argue that because Gardner spent only 2.5% of his working time in Iowa he did not spend a substantial part of [his] working time working for the employer in this state. Id. It believes that in proportion to his total work time, Gardner's time in Iowa was not substantial. Gardner contends that his working time in Iowa was substantial in light of the fact that his work was evenly spread throughout forty states and was not any more substantial in any one place. He believes that in relation to his total work time, his time in Iowa was substantial. Iowa Code section 85.71 does not include a definition of the term substantial. See id. § 85.71. In the absence of a legislatively provided definition, we must employ our normal tools of statutory interpretation to define the term and interpret the statute. See Swanson, 668 N.W.2d at 574-75. As we undertake this analysis, it is important to note that the issue of what is meant by a substantial part of the employee's working time working for the employer in this state is substantially clouded by the statute's current structure. Iowa Code § 85.71(2); see also id. § 85.71. In Henriksen, we noted that the legislature had not included additional definitional language from the Model Act under the second (domicile) clause of Iowa Code section 85.71(1). 540 N.W.2d at 257. This language encompassed the requirement that the employee `spends a substantial part of his working time in the service of his employer in this or such other state' in addition to being domiciled in the state. Id. (citation omitted). When amending section 85.71, the legislature chose to add the substantial part language to the statute but placed it in subsection (2) rather than with the second (domicile) clause of subsection (1). See 1997 Iowa Acts ch. 106, § 1. This has created a statute that is arguably contradictory and clearly different from other state statutes pertaining to extraterritorial jurisdiction. This has the further effect of making it difficult to find prior decisions of other courts dealing with the precise substantial part question raised in this appeal. See Swanson, 668 N.W.2d at 574-75. Iowa Code section 85.71(2) requires that a contract for hire be made in Iowa for employment not principally localized in any state and that the employee spend a substantial part of [his] working time working for the employer in Iowa. Iowa Code § 85.71(2). Both the Model Act and other state statutes require that only the first and second of these requirements be met. See Model Act §§ 7(a)(2), (d)(4); see also Ala.Code § 25-5-35(d)(2) (2000); Ky. Rev.Stat. Ann. § 342.670(1)(b) (Michie 1997); N.M Stat. Ann. § 52-1-64(B) (Michie 2003); 77 Pa. Cons.Stat. Ann. § 411.2(a)(2) (West 2002). The Model Act approach permits a worker who has transitory employmentsuch as a truck driverto establish jurisdiction within the state in which his contract was created so long as his employment has not subsequently focused on another state (principally localized) so as to trump the state of contracting's public policy interest in supervising contracts formed within its borders. See 9 Arthur Larson & Lex K. Larson, Larson's Workers' Compensation Law § 143.04[2][c], at 143-24 to -25 (2003) [hereinafter Larson]. [4] Moreover, this approach is consistent with traditional applications of various principles related to contract formation and workers' compensation law. See id. § 143.03[1]. In fact, this was essentially the status of Iowa law before section 85.71 was enacted by the legislature in 1973. See Dahl, 24 Drake L.Rev. at 351-52. However, under Iowa's current section 85.71(2), the legislature has added an additional hurdle that the employee also show he spends a substantial part of [his] working time working for the employer in Iowa. The effect of this language is to require an employee seeking to invoke jurisdiction under section 85.71(2) to show that he does not have significant contact with any state while also showing he spends a substantial amount of time in Iowa. This seemingly contradictory result runs contrary to the intent behind the Model Act, which was meant to provide for eased establishment of jurisdiction by a transitory employee like Gardner. [5] See Model Act § 7 cmt. at 97-98. Instead of the state simply maintaining its public policy interest in the contract formed within its borders and losing that interest only in light of another state with a higher interestthe state where employment is principally localizedsection 85.71(2) may actually make it more difficult for the state to uphold its interest in supervising Iowa contracts. See Larson § 143.04[2][c]. In fact, in this case at least, we feel constrained to find that this is just what has happened. As noted, other states utilizing the substantial part language have done so in conformance with the Model Act definition of principally localized. This definition has been interpreted as requiring an analysis of whether an employee is domiciled and spending a substantial part of his working time working in the state only after the first method of determining principal localizationwhich considers the location of the employer's place of business and the employee's relationship to that locationhas failed. Model Act § 7(d)(4); see also Cowger v. Indus. Comm'n, 313 Ill.App.3d 364, 245 Ill.Dec. 707, 728 N.E.2d 789, 795 (2000); Davis v. Wilson, 619 S.W.2d 709, 711 (Ky.Ct.App.1980); Todacheene v. G & S Masonry, 116 N.M. 478, 863 P.2d 1099, 1102 (App.1993); Lambie v. Workers' Comp. Appeal Bd., 736 A.2d 67, 69-70 (Pa.Commw.Ct.1999). Nevertheless, some courts have had the opportunity to determine what constitutes a substantial part within the confines of their respective states' extraterritorial jurisdiction statute. See Ex parte Tri-State Motor Transit Co., 541 So.2d 557, 558-59 (Ala. Civ.App.1989); Seales by Seales v. Daniel Constr. Co., 469 So.2d 629, 630-31 (Ala.Civ. App.1985), overruled in part by Ex parte Robinson, 598 So.2d 901, 904 (Ala.1991); Cowger, 245 Ill.Dec. 707, 728 N.E.2d at 796; Davis, 619 S.W.2d at 711; Todacheene, 863 P.2d at 1105-06; Lambie, 736 A.2d at 70; Hiller v. Workmen's Comp. Appeal Bd., 131 Pa.Cmwlth. 189, 569 A.2d 1024, 1028 (1990); Robbins v. Workmen's Comp. Appeal Bd., 91 Pa.Cmwlth. 269, 496 A.2d 1349, 1352 (1985). No jurisdiction has adopted the relative approach advanced by Gardner for determining whether his employment was substantial. Instead, each of the other jurisdictions has simply looked at the whole picture of a claimant's employment to see what proportion of that employment time was spent working in their state. [6] Significantly, none have found an amount of working time so low as 2.5% to constitute a substantial part of the employee's working time working for the employer in [the] state. Iowa Code § 85.71(2); see also Tri-State Motor Transit Co., 541 So.2d at 559 (employees' time in state not substantial); Seales by Seales, 469 So.2d at 630-31 (approximately 53% of time spent in state not substantial); Cowger, 245 Ill.Dec. 707, 728 N.E.2d at 796 (infrequent in-state layovers while waiting for work assignments not substantial); Davis, 619 S.W.2d at 711 (20% of time spent in state is substantial); Todacheene, 863 P.2d at 1106 (prior year of working in state before out-of-state accident is substantial); Lambie, 736 A.2d at 70 (two days a week not substantial); Robbins, 496 A.2d at 1352 (delivery of fourteen of thirty-seven loads and other driving time substantial). Moreover, despite the extensive and convoluted background and evolution of section 85.71(2), the mere fact it was amended by the legislature exhibits some measure of legislative intent. Clearly, the legislature intended to effect a change in the law when it amended subsection (2). The alteration it chose indicates its belief that jurisdiction under subsection (2) should be established by something more than the limited employment-related contact a transitory employee would have with a state in which his employment is not principally localized. In fact, if the legislature had not amended section 85.71(2), jurisdiction may have been established based in part on the same key evidence that Gardner does not work more than 2.5% in any one place that he here asserts as evidence that he actually spends a substantial part of [his] working time working for [the] employer in Iowa. Iowa Code § 85.71(2). The legislature clearly intended to up the jurisdictional ante by departing from prior law granting jurisdiction based on an employee's contract for hire and limited contact with the state to now require that an employee also spend a substantial part of the employee's working time working for [the] employer in Iowa. Id. Ultimately, Gardner simply did not spend a substantial part of [his] working time working for Heartland in Iowa. Id. For this reason, the statutory prerequisites for the exercise of subject matter jurisdiction over his claim by an Iowa judicial body were not established. See id. Gardner's claim was wrongly filed in Iowa. [7] Therefore, we now exercise the duty of any court upon finding that it does not have subject matter jurisdiction and dismiss this action for want of that jurisdiction. See Steel Co., 523 U.S. at 94, 118 S.Ct. at 1012, 140 L.Ed.2d at 227; Bailey, 576 N.W.2d at 337-38. The result we reach in this case is done with some disinclination. However, while the legislative standard challenged in this case would appear to be capable of being satisfied only in rare circumstances, we cannot say the standard enacted is absurd or ineffectual. Ultimately, we are bound by the separate and distinct roles of our three branches of government and our fundamental and essential respect for the law-making function of the legislative branch. It is outside the role of the judicial branch to intrude into this function. Our respect for this venerable and important principle is greater than any particular unfair result we may perceive in a particular case. If our legislature finds, upon consideration of this case, that the statute at issue indeed functions in a manner that was not anticipated, it can, and, we trust, will, change it to give it different meaning. REVERSED AND DISMISSED. All justices concur except WIGGINS, J., who takes no part.