Allegre v. Iowa State Bd. of Regents, 83-686

• Decision Date: 16 May 1984
• Docket Number: No. 83-686,83-686
• Citation: 349 N.W.2d 112
• Parties: 17 Ed. Law Rep. 949 Charles F. ALLEGRE, George G. Ball, Gordon B. Denton, Mary Kay Eakin, Josef W. Fox, William E. Luck, Arlene Ruthenberg, Ruth Sevy, Keith McKean and Leland L. Wilson, Appellants, v. IOWA STATE BOARD OF REGENTS, Appellee.
• Court: Iowa Supreme Court

Page 112

349 N.W.2d 112

17 Ed. Law Rep. 949

Charles F. ALLEGRE, George G. Ball, Gordon B. Denton, Mary Kay Eakin, Josef W. Fox, William E. Luck, Arlene Ruthenberg, Ruth Sevy, Keith McKean and Leland L. Wilson, Appellants, v. IOWA STATE BOARD OF REGENTS, Appellee.

No. 83-686.

Supreme Court of Iowa.

May 16, 1984.

Charles E. Gribble and Gerald L. Hammond of Sayre & Gribble, P.C., Des Moines, for appellants.

John W. Sabbath and Harold B. Strever, Jr., of Reed, Merner, Sabbath, Strever, Zanville, Oppold & Hansen, Cedar Falls, and Joseph E. Flynn, St. Paul, Minn., for appellee.

Considered by UHLENHOPP, P.J., and HARRIS, McCORMICK, McGIVERIN and LARSON, JJ.

McGIVERIN, Justice.

Petitioners are ten former members of the faculty of the University of Northern Iowa who assert they are entitled to payment for unused and accumulated sick leave to the date of their retirement pursuant to Iowa Code section 79.23. They appeal from a district court decision which dismissed their petition for judicial review on the ground that they had failed to exhaust administrative remedies through contested case provisions of the Iowa Administrative Procedure Act (IAPA), Iowa Code chapter 17A. We reverse and remand.

For convenience all ten petitioners will be referred to jointly under the name of Allegre, who is one of the petitioners.

Iowa Code section 79.23 (1979), as amended by 1979 Iowa Acts chapter 2, §§ 42-43, provides in part:

Commencing July 1, 1977, when a state employee, excluding an employee covered under a collective bargaining agreement which provides otherwise, retires under the provisions of a retirement system in the state maintained in whole or in part by public contributions or payments, the number of accrued days of active and banked sick leave of the employee shall be credited to the employee. When an employee retires, is eligible and has applied for benefits ... the employee shall receive a cash payment for the employee's accumulated, unused sick leave in both the active and banked sick leave accounts except when, in lieu of cash payment, payment is made for monthly premiums for health or life insurance or both as provided in a collective bargaining agreement negotiated under chapter twenty (20) of the Code.... However, the total cash payment for accumulated, unused sick leave shall not exceed two thousand dollars and is payable upon retirement.... The claim for an employee of the state board of regents shall be filed with the state board of regents on forms provided by the board.

(Emphasis added.)

The Iowa State Board of Regents (Board) is a state agency under Iowa Code chapter 262. The Board oversees the University of Northern Iowa (UNI), and its employees are those of the Board for the purposes of this case.

The pleadings disclose the following. At its June 18-19, 1980, meeting, without any hearing involving petitioners, the Board decided that UNI be directed "not to pay any accumulated, unused sick leave upon retirement to members of the faculty collective bargaining unit of the University of Northern Iowa." Petitioners retired from their respective faculty positions after July 1, 1979. They were members of an "employee organization," Iowa Code section 20.3(4), and covered by a collective bargaining agreement with the Board of Regents. Each petitioner made application to UNI and the Board under section 79.23 requesting cash payment for his or her unused, accumulated sick leave. UNI denied payment, citing the Board's decision to not authorize payment to members of the collective bargaining unit who retired after June 30, 1979.

Petitioners brought a declaratory judgment action to determine whether they were entitled to benefits under section 79.23. In Allegre v. Iowa State Board of Regents, 319 N.W.2d 206 (Iowa 1982) (Allegre I ), we stated that the Board's determination to deny such benefits constituted "agency action" within the meaning of Iowa Code section 17A.2(9). We further held that the exclusive means of review of the agency's action was the judicial review procedure contained in Iowa Code section 17A.19.

Allegre then filed the present petition for judicial review in district court pursuant to section 17A.19(1). The Board filed a motion to dismiss the petition. In division III of the motion, the Board contended the controversy involved a "contested case" as defined in section 17A.2(2); that petitioners had failed to exhaust their administrative remedies through contested case provisions of the IAPA; and therefore, the district court was without subject matter jurisdiction to judicially review the Board's action.

The district court sustained the Board's motion for the reasons urged therein and dismissed the petition.

Petitioners appeal. They contend: 1) this controversy does not involve a "contested case" under the IAPA; and 2) that the agency action denying them benefits under section 79.23 was final pursuant to section 17A.19(1) and subject to judicial review by the district court. Accordingly, petitioners assert they had exhausted their administrative remedies, and the district court had subject matter jurisdiction to judicially review the Board's action in rejecting their claim.

I. Characterization of controversy as "contested case" or "other agency action." Having determined in Allegre I that the Board of Regent's decision denying Allegre's request for payment of accumulated sick leave was "agency action" ¹ and thus subject to the IAPA's judicial review provisions, we now are faced with the issue of characterizing the nature of such "agency action."

The IAPA divides administrative action into three categories: "rulemaking," adjudication (referred to as a "contested case"), and "other agency action." Polk County v. Iowa State Appeal Board, 330 N.W.2d 267, 276 (Iowa 1983). See Bonfield, The Definition of Formal Agency Adjudication Under the Iowa Administrative Procedure Act, 63 Iowa L.Rev. 285, 286-87 (1977). "Other agency action" is a residual category--if administrative action does not fall within the definition of "rulemaking" or "contested case," then it must be "other agency action." Polk County, 330 N.W.2d at 276-77.

The parties make no contentions that the Board's action should be construed as "rulemaking." Therefore, we need only consider whether this controversy should be reviewed as a "contested case" or "other agency action." "The importance of the distinction lies in the procedural due process which attaches to contested cases." Id. at 276.

Agency action falls within the general adjudication category when it determines the rights, duties and obligations of specific individuals as created by past transactions or occurrences. Polk County, 330 N.W.2d at 277. An agency proceeding is defined by statute to be a "contested case" if the constitution or a statute requires that those rights be determined by an agency after an opportunity for an evidentiary hearing. Iowa Code § 17A.2(2). "The evidentiary hearing required by section 17A.2(2) is 'an oral proceeding whose purpose is to determine disputed facts of particular applicability known as adjudicative facts--the who, what, when, where, and why of particular individuals in specified circumstances.' " Polk County, 330 N.W.2d at 277 (quoting Bonfield, Formal Agency Adjudication, 63 Iowa L.Rev. at 294). If a hearing is not required, or the hearing required is not an evidentiary hearing, the adjudication will be categorized as "other agency action." Polk County, 330 N.W.2d at 277; see also Bonfield, Formal Agency Adjudication, 63 Iowa L.Rev. at 288. Our initial inquiry, therefore, must determine whether the Board of Regents is required by statute or constitution to grant petitioners an opportunity for an evidentiary hearing.

This is a paradoxical case in that the agency--Board of Regents--is arguing that it should be required by statute or constitution to provide a formal evidentiary hearing to petitioners, after having already denied petitioners' claim. The Board further contends that petitioners' failure to pursue such a hearing is evidence that petitioners have not exhausted their administrative remedies. Petitioners, on the other hand, the party typically asserting the right to an evidentiary hearing, do not seek an evidentiary hearing and have not objected to the Board's informal decision-making procedure. They seek only to pursue judicial review of the Board's decision which they contend was "final agency action." See Iowa Code § 17A.19(1).

A. Statutory requirement. The Board concedes there is no express statutory requirement to provide petitioners with an evidentiary hearing, nor a hearing of any kind, to adjudicate their claim for payment of accrued sick leave. See Iowa Code § 79.23 (state employee's credit for accrued sick leave); Iowa Code § 262.9 (powers and duties of State Board of Regents).

The Board argues, however, that these statutes when construed together impliedly require an evidentiary hearing. Professor Bonfield comments on the theory of an implied statutory requirement as follows:

[T]here is nothing in the "required by constitution or statute" language, in its legislative history, or in good policy, that indicates that the hearing requirement referred to must be express--that is, linguistically blunt on the face of the Constitution or the statute. The hearing requirement certainly may, therefore, be implied as well as express.... [T]he right to an evidentiary hearing may be found, for example, not only on the face of a statute but also in its legislative history, in implications drawn from its less than clear language, and from the linguistic or factual context in which it appears.

Bonfield, Formal Agency Adjudication, 63 Iowa L.Rev. at 312 (emphasis in original).

We fail to discern, however, any basis in the statute or its legislative history for finding that the State Board of Regents is impliedly required to grant petitioners a formal evidentiary hearing. We said in Allegre I that "[a]lthough not...