A plaintiff suing former coworkers at the Federal Home Loan Bank of Des Moines for defamation waited too long to file suit in Polk County District Court because she failed to act on information she knew or should have known that could have formed the basis for a defamation claim before the statute of limitations expired, the Iowa Supreme Court held in a Jan. 9 decision.

The decision was written by Justice Edward Mansfield and joined by all members of the Court except Justice Thomas Waterman, who took no part in consideration or decision of the case. [Disclosure: Nyemaster Goode attorneys Dana Hempy, David Bower, and Katie Graham represented the defendants in this case.]

Linda Betz, who was fired from her executive position at FHLB, claimed that three former colleagues made defamatory statements about her. Her suit was filed more than three years after those statements were published, but Betz argued that she brought her action within the two-year statute of limitations based on when she discovered the defamatory statements, not when they were made.

The Iowa Supreme Court disagreed, saying that even if Betz could rely on that argument, her defamation claim is nonetheless barred because the statute of limitations clock began ticking when she “knew or should have known” facts that put her on notice that she might have a claim. She was aware of those facts earlier based on facts contained in her previous, unsuccessful, suit against the bank asserting she was fired on the basis of sexual discrimination.

The Court based its holding in Betz’s case on its prior decisions dating back decades that recognized plaintiffs are subject to an “inquiry notice,” meaning they have a duty to know what a “reasonable investigation would have disclosed” about their claim in order to file suit within the statute of limitations.

“We have repeatedly held that the discovery rule cannot save a plaintiff who may have lacked actual notice but who failed to act diligently in investigating the facts they had,” Justice Mansfield wrote. For example, in Mormann v. Iowa Workforce Development (2018), the Court held that an employment discrimination case was properly dismissed despite the discovery rule. “The plaintiff admittedly knew ‘he was a member of the protected class, he was qualified for the job, he suffered an adverse employment action, and a younger worker was hired.’ … Those facts were enough to kick-start the limitations period even though the defendant allegedly concealed the real reasons why the plaintiff had not been hired.”

In Betz’s case, she was aware by Nov. 11, 2020, that she had, in her view, been wrongfully discharged, and that FLHB management implied in a federal Securities and Exchange Commission filing that her firing was for cause. And she believed she had been defamed through “additional slanderous and libelous statements.”

Thus, Justice Mansfield wrote, “we have no doubt that as of November 11, Betz was on inquiry notice of defamation claims based on negative statements by FHLB employees relating to her job performance. Betz may not have known who said what, or that there had been an internal complaint and an internal audit, but she realized that people had been unjustly criticizing her work.”

That knowledge should have triggered an investigation by Betz into a potential claim, the Court said, and in fact, by late March 2021, Betz acknowledged that she knew of the statements made by the defendants. “Still, Betz waited almost another two years before filing suit over those statements.” By then, it was too late.

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