Melissa Nelson worked as an assistant to dentist James Knight for about 10 years, The Des Moines Register reported.
During Nelson's last 18 months of employment with Knight, the dentist reportedly began to complain about his assistant's tight clothing.
"Dr. Knight acknowledges that he once told Nelson that if she saw his pants bulging, she would know her clothing was too revealing," court papers state.
Knight also recalled "that after Nelson allegedly made a statement regarding infrequency in her sex life, he responded to her, '[T]hat's like having a Lamborghini in the garage and never driving it.'"
About six months before her termination, Nelson and Knight began texting frequently, mostly about child-related matters, court papers state. Knight's wife discovered the text messages in late 2009 and demanded that Nelson be fired.
In January, 2010, Knight apparently told Nelson's husband that "she's a big threat to our marriage" and that Knight feared he would attempt an affair if Nelson was not fired.
The Iowa Supreme Court ruled Friday that the conduct between Knight and Nelson did not amount to sexual harassment because it was based on specific emotions and a specific relationship, not based solely on Nelson's gender.
"The civil rights laws seek to insure that employees are treated the same regardless of their sex or other protected status," justices wrote in a 16-page decision. "Yet even taking Nelson's view of the facts, Dr. Knight's unfair decision to terminate Nelson [while paying her a rather ungenerous one month's severance] does not jeopardize that goal."