Bahr v. State Inv. Bd.

Decision Date07 July 1994
Docket NumberNo. 93-1194,93-1194
Citation186 Wis.2d 379,521 N.W.2d 152
PartiesAlden W. BAHR, Plaintiff-Respondent, v. STATE of Wisconsin INVESTMENT BOARD, Defendant-Appellant. d
CourtWisconsin Court of Appeals

Before EICH, C.J., GARTZKE, P.J., and DYKMAN, J.

EICH, Chief Judge.

I. Background

Alden Bahr had worked as a State Investment Board research analyst--a classified civil service position--for many years. As a member of the classified service, Bahr had certain statutory rights, including the right to be fired only for cause. In 1988, a law became effective moving all nonclerical positions at the board to the unclassified service. Persons in the unclassified service may be discharged at will. Five months after the reclassification of his position, Bahr received notice that he was being fired. The notice did not specify any reasons for the board's action.

Bahr sued the board, seeking a judgment declaring that the reclassification of his position and his subsequent firing deprived him of a protected property interest. He also claimed that his discharge violated the provisions of the Age Discrimination in Employment Act of 1967, 29 U.S.C. §§ 621-34.

The board's answer asserted that Bahr's action was barred by principles of sovereign immunity. Bahr moved for summary judgment and the trial court granted the motion, rejecting the board's argument and ruling (a) that the reallocation of his position to the unclassified service did not abrogate the "vested property interest" Bahr had acquired in his job under the civil service laws, and (b) that the board violated his due process rights by firing him without a determination of just cause for his removal. 1

Shortly thereafter, the trial court held a scheduling conference and, after extensive discussion with counsel, concluded that no further proceedings were necessary in the case. The court ordered the board to reinstate Bahr to his former position at the same pay and benefit level to which he would have been entitled if his employment had not been interrupted by the discharge. In so doing, the court rejected the board's claim that the court lacked authority to order retrospective monetary relief, such as "back pay and benefits" for Bahr.

The parties then stipulated that the back pay to which Bahr was entitled under the court's rulings was approximately $106,000, and that all further proceedings be stayed pending resolution of the board's appeal.

II. Issues

We are asked to determine on appeal: (1) whether the board partakes of the sovereign's immunity from suit; (2) if it does not, whether Bahr's right as a classified civil service employee to be discharged only for cause survived the legislative reclassification of his position; and (3) if that right survived, whether the court had the authority to order him reinstated with back pay and benefits.

The issues involve the interpretation of statutes and the application of statutory and case law to the facts of the case. As such, they are questions of law which we review de novo, owing no deference to the trial court's conclusions. Betthauser v. Medical Protective Co., 172 Wis.2d 141, 146, 493 N.W.2d 40, 41 (1992).

Based on our independent review of the issues, we conclude that the board is not immune from suit and that the reclassification of Bahr's position did not extinguish his right to be fired only for cause. We also conclude that the court did not err in ordering reinstatement and back pay.

III. Facts

The facts are not in dispute. Bahr was hired by the board in 1982 as a research analyst, a position in the classified service. After he completed the required probationary period, Bahr was given a permanent appointment to the classified service. Over the next three years he was promoted three times and his work was consistently rated as "satisfactory."

At the time of his hiring, § 25.16(2), STATS., 1981-82, provided that the board's executive director "shall appoint the employes necessary to perform the duties of the board under the classified service." Section 230.34(1)(a), STATS., governing demotion, suspension, discharge and layoff of state employees, provided at the time--and continues to provide today--that employees with "permanent status" in the classified service "may be removed, suspended ... discharged ... or demoted only for just cause."

The legislature subsequently amended § 25.16(2), STATS., 2 to provide as follows: "The executive director shall appoint all [board] employes outside the classified service, except blue collar and clerical employes."

In June 1988, Bahr's supervisor rated his performance as "conditional" and several weeks later recommended to the director that Bahr's employment be terminated. On October 10, 1988, the director sent Bahr a notice stating that his employment would be terminated in thirty days.

Bahr appealed the termination to the Wisconsin Personnel Commission, and the commission dismissed the appeal on grounds that it lacked jurisdiction in the case because Bahr did not have permanent status in class in his current position. 3 Bahr then commenced this action. As indicated, the trial court granted him the relief he sought, and the board appeals.

IV. Sovereign Immunity

The doctrine of sovereign immunity originates in article IV, section 27 of the Wisconsin Constitution, which states: "The legislature shall direct by law in what manner and in what courts suits may be brought against the state." Under the rule, the state may only be sued upon its express consent; consent to suit may not be implied. State v. P.G. Miron Constr. Co., 175 Wis.2d 476, 480, 498 N.W.2d 889, 891 (Ct.App.1993), rev'd on other grounds, 181 Wis.2d 1045, 512 N.W.2d 499 (1994). And, for purposes of the rule, an action against a state agency or board is an action against the state. Metzger v. Department of Taxation, 35 Wis.2d 119, 131-32, 150 N.W.2d 431, 437-38 (1967).

It is well recognized that the state waives its sovereign immunity from suit when it creates an agency as an "independent going concern;" one with "independent proprietary powers and functions." Lister v. Board of Regents of the Univ. of Wis. Sys., 72 Wis.2d 282, 292, 240 N.W.2d 610, 618 (1976). Whether an agency is an independent going concern, of course, depends on the statutes establishing its powers. See id. at 292-93, 240 N.W.2d at 618. In Lister, the supreme court held that the Board of Regents of the University of Wisconsin System was not such a "going concern" because:

Under the provisions of [the applicable statutes] the board was not empowered to incur any debt and the state treasurer was to have charge of "all moneys belonging to the university or in any wise appropriated by law to its endowment or support." Sec. 36.03(3), Stats.1969. In addition, the treasurer was to pay moneys out "only upon the warrant of the department of administration as provided by law." It is clear from these provisions that at the time this dispute arose ... the Board ... enjoyed [insufficient] autonomy.... [And] the ... action constituted a suit against the state and was therefore subject to the defense of sovereign immunity.

Id. at 293, 240 N.W.2d at 618.

In Majerus v. Milwaukee County, 39 Wis.2d 311, 159 N.W.2d 86 (1968), the court considered whether the statutes governing the Wisconsin State Armory Board were such as to render it an "independent going concern," making it ineligible to claim the defense of sovereign immunity. Considering those statutes, the court held that the board was such an independent body:

The Armory Board has power to convey real estate and dispose of personal property without express authority from the state. It has the power to hold and disburse its own funds independent of state warrants. It is given no appropriation but has the power to borrow money and issue and sell bonds and other evidences of indebtedness to accomplish its purposes. The debts thus created are satisfied out of rents and interest the Armory Board receives from the property it acquires.

Id. at 314-15, 159 N.W.2d at 87.

The armory board argued it should not be considered an independent going concern because it lacked the power to raise money by taxation, held the property it acquired in trust for the state and, further, was "created to perform only certain specific administrative duties and ... ha[d] no undedicated property out of which an execution c[ould] be satisfied." Majerus, 39 Wis.2d at 315, 159 N.W.2d at 87. The court rejected the argument, noting that the statutes gave the board "a very distinct character" because they stated that the board was created as "a body politic and corporate" with the power "to sue and be sued." These statutes, together with those prescribing its powers, were held to render the board sui juris and thus subject to suit. Id. at 315, 159 N.W.2d at 87-88. 4

Here, the investment board emphasizes that, while it also has the power to sue and be sued, it is designated only as a "body corporate," not both a "body politic and corporate," as was the armory board in Majerus. The board points to language in the Majerus opinion stating that, as a body politic and corporate, the armory board was "almost unique." Majerus, 39 Wis.2d at 315, 159 N.W.2d at 88. And the board characterizes that language as "distinguishing" the armory board from the investment board and other state agencies which, in the statutes empowering them to sue and be sued, are designated solely as "bodies corporate." We disagree.

In context, the Majerus court's discussion was as follows:

The Armory Board ... is given a very distinct character.... While some state boards are created a body corporate with the power to sue and be sued, other bodies corporate do not have the right to sue or be sued. Some agencies are not separate corporate bodies but they may sue and be sued. Other divisions of the state government have neither corporate status nor authority to sue or be...

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