603 F.2d 522 (5th Cir. 1979), 77-1810, Gosney v. Sonora Independent School Dist.

Docket Nº:77-1810.
Citation:603 F.2d 522
Party Name:Billy C. GOSNEY and Mary Lynn Gosney, Plaintiffs-Appellants, v. SONORA INDEPENDENT SCHOOL DISTRICT et al., Defendants-Appellees.
Case Date:September 28, 1979
Court:United States Courts of Appeals, Court of Appeals for the Fifth Circuit

Page 522

603 F.2d 522 (5th Cir. 1979)

Billy C. GOSNEY and Mary Lynn Gosney, Plaintiffs-Appellants,

v.

SONORA INDEPENDENT SCHOOL DISTRICT et al., Defendants-Appellees.

No. 77-1810.

United States Court of Appeals, Fifth Circuit

September 28, 1979

Page 523

Larry Watts, Houston, Tex., for plaintiffs-appellants.

George S. Finley, San Angelo, Tex., for defendants-appellees.

Appeal from the United States District Court for the Northern District of Texas.

Before WISDOM, CLARK and GEE, Circuit Judges.

GEE, Circuit Judge:

This section 1983 civil rights action 1 arose from the refusal of the Sonora Independent School District to renew teaching contracts of appellants Billy C. Gosney and his wife Mary Lynn Gosney. Billy C. Gosney was hired as a junior high school principal by the Sonora Independent School District in 1962. Mary Lynn Gosney was hired as an elementary school teacher in the same district in 1963. The Gosneys held their respective positions with untarnished records until 1974, when the school district's board of trustees declined to renew their one-year contracts because it found them in violation of its policy against outside employment by school district personnel. 2 Over their years in Sonora, the Gosneys had acquired a substantial cattle ranching enterprise. In May 1974, they added a retail dry goods store to their holdings. The Sonora Independent School District's Board of Trustees, which hired the district's personnel, knew of the Gosneys' cattle ranching interests but did not base its nonrenewal decision on that activity. Rather, it was concerned only with their retailing venture.

The board learned of the Gosneys' acquisition of the dry goods store after it had adopted and entered in its official minutes motions to rehire Mr. and Mrs. Gosney for the 1974-75 academic year and after they had been informed of its action but before the contracts were issued. 3 It responded to the new information by holding meetings on May 6 and 13, 1974, reopening discussion of the Gosneys' contract renewals. The board orally invited Mr. Gosney to attend a meeting on May 20 to address the matter.

Page 524

At this meeting, Mr. Gosney informed the board that neither he nor Mrs. Gosney intended to resign to manage the store and that they had retained the store's long-time business manager to run it. Gosney argued that because the store would be operated through employed personnel the business would not interfere with his duties as principal. Unpersuaded, the board of trustees voted four to three at the May 20 meeting not to renew the contracts of either Mr. or Mrs. Gosney because of their growing involvement in outside businesses.

The Gosneys hired an attorney and requested another hearing, which was granted and held on June 24, 1974. Before this meeting, Mr. Gosney was given a copy of the minutes of the May 20, 1974, meeting that set forth the board's reasons for not renewing the contracts. At the June 24 meeting, Mr. Gosney stressed again that he intended to hold the store only as an investment and that it would be managed by someone without the active participation of himself or his wife. The board adhered to its decision not to renew Mr. Gosney's contract but relented as to Mrs. Gosney and offered her a teaching contract, which she refused. 4

Mr. and Mrs. Gosney then brought suit for reinstatement, for back pay, and for declaratory and injunctive relief against the Sonora Independent School District, its superintendent of schools in his official capacity, and, again in their official capacities, against the four members of the board of trustees who had voted against their contract renewals. The Gosneys alleged that the defendants violated their fourteenth amendment rights to procedural due process by depriving them of a property interest in continued employment without affording them adequate notice and hearing; to substantive due process by enforcing a rule against outside employment that bore no rational relation to any legitimate state interest in the educational system; and to equal protection by arbitrarily and selectively enforcing the outside employment rule against them.

The district court, in an unpublished opinion, held that the Gosneys had a protected property interest in their continued employment by virtue of the board's vote to grant them one-year contracts for 1974-75 but that they were afforded procedural due process because they received both notice that their purchase of the dry goods store was problematic under district policy and an opportunity to appear before the school board and present their case in impartial hearings. The court also held that the board's policy against outside employment did not violate the Gosneys' substantive due process rights because the rule was a rational and proper means for assuring a well-functioning school system. And the trial judge, construing the rule as forbidding only "substantial outside (business) involvement," held that it was not arbitrary in application or violative of the Gosneys' equal protection rights. Finally, he found that the record of the school board hearings furnished substantial evidence to support the nonrenewal action and that Mrs. Gosney's rejection of an unconditional offer to give her a contract for the 1974-75 academic year provided the school board with an absolute defense against her claims. While we agree with much of the analysis of the court below, we reverse because we find that the enforcement of the rule was arbitrarily and discriminatorily selective in violation of the equal protection clause of the fourteenth amendment.

Preliminarily, we find that because she received a good-faith, unconditional offer of...

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