Davis v. Human Development Corp.

• Decision Date: 31 December 1985
• Docket Number: No. 48481,48481
• Citation: 705 S.W.2d 540
• Parties: George DAVIS, Plaintiff-Appellant, v. HUMAN DEVELOPMENT CORPORATION, Defendant-Respondent.
• Court: Missouri Court of Appeals

Page 540

705 S.W.2d 540

George DAVIS, Plaintiff-Appellant, v. HUMAN DEVELOPMENT CORPORATION, Defendant-Respondent.

No. 48481.

Missouri Court of Appeals,

Eastern District,

Division Two.

Dec. 31, 1985.

Motion for Rehearing and/or Transfer

Denied Jan. 28, 1986.

Application to Transfer Denied

March 25, 1986.

Raymond Howard, St. Louis, for plaintiff-appellant.

Louis Gilden, St. Louis, for defendant-respondent.

STEPHAN, Chief Judge.

Alleging that his employment had been wrongfully terminated, plaintiff-appellant George Davis brought an action for damages and for reinstatement against defendant-respondent Human Development Corporation (HDC). A non-jury trial was held in the Circuit Court of the City of St. Louis, after which the court entered judgment in favor of defendant with a memorandum opinion. The judgment in favor of defendant was based on the court's finding that plaintiff waived his right to seek redress in the courts by his failure to properly avail himself of the internal grievance procedures provided by his employer. We reverse and remand.

Appellant George Davis was administrative assistant of transportation for Project Head Start, a federal program administered locally by defendant HDC, and funded through the U.S. Department of Health and Human Services. 42 U.S.C.A. § 9831 (1981). On January 7, 1982, appellant was suspended from his job pending an investigation by the Director of Head Start, Lois Harris, because of a reported fight between appellant and a fellow employee. Following the investigation, Director Harris recommended by a memorandum dated January 25, 1982, that appellant's employment be terminated due to his violation of Chapter II(B)(4) of HDC's Personnel Manual, which proscribes "abusive and improper treatment of other employees or the public ..." The memorandum was directed to Georgia Rusan, Chief of Family Services for HDC.

On February 26, 1982, the General Manager of HDC, Harold Antoine, wrote a letter to appellant informing him that his employment was terminated effective immediately, and advising him of his right to appeal the termination pursuant to the grievance procedures in HDC's Personnel Manual. The letter was postmarked March 4th and was received by appellant on March 5th. On March 8th appellant, through his attorney, wrote to Johnnie Lee Henderson, Chairman of the Board of Directors of HDC, appealing his termination and requesting a hearing. No hearing was ever held or action taken with regard to appellant's grievance.

Appellant's termination apparently caused controversy between officials of HDC and the Head Start Policy Council. ¹ In a memorandum to Head Start Director Harris dated February 12, 1982, the Policy Council stated that it would "table" the recommendation for termination of appellant's employment. A subsequent letter from the Policy Council to Director Harris, dated March 15, 1982, demanded appellant's reinstatement. This controversy ultimately led to a letter of complaint by the Policy Council to the regional Kansas City office of the Department of Health and Human Services.

Appellant raises three points on appeal. The first two points relate to the trial court's finding that appellant's grievance was not timely filed and that it was not filed with the appropriate person, thus appellant failed to exhaust his administrative remedies and was precluded from bringing an action in the circuit court. Appellant contends that he was foreclosed from availing himself of the grievance procedure since he did not receive the termination letter dated February 26, 1985, until March 5th, which made it impossible to file a grievance within the five-working-days grievance period. The trial court, nevertheless, found that the grievance letter sent to the chairman of HDC was untimely. Appellant also argues that requiring him to file a grievance with his supervisor would have been futile in that his supervisor had no authority to reinstate him after he had been dismissed by the General Manager. He contends that only the Board of Directors, with which appellant did file a grievance, could reverse the decision of the General Manager. In his third point, appellant contends that he was improperly discharged, since his employment could not be terminated without the approval of the Head Start Policy Council. In light of our disposition of the case, we need only address appellant's final point.

Our review of the trial court's judgment is governed by Rule 73.01 as explicated in the familiar case of Murphy v. Carron, 536 S.W.2d 30, 32 (Mo. banc 1976): "[T]he decree or judgment of the trial court will be sustained by the appellate court unless there is no substantial evidence to support it, unless it is against the weight of the evidence, unless it erroneously declares the law, or unless it erroneously applies the law." We conclude that, in holding Head Start Policy Council approval unnecessary to the termination of Davis' employment, the trial court's ruling was against the overwhelming weight of the evidence and amounted to an erroneous declaration of the law.

The central issue is whether appellant was an employee of HDC or of Head Start. We are not convinced by respondent's argument that appellant was an employee of HDC, which argument is based solely on the fact that appellant was paid out of the indirect cost budget of HDC. The determination of whether someone is an employee is generally based on who exercises the "right of control." This right is affected by such things as the "extent of control, actual exercise of control, duration of employment, right to discharge, method of payment for services, furnishing of equipment, whether the work is part of the regular business of the employer, and the contract of employment, none of which is in itself controlling, but each may be considered relevant to the issue. " Howard v. Winebrenner, 499 S.W.2d 389, 395 (Mo.1973) (Emphasis added).

In the case at bar, appellant worked in the Head Start program, and his duties involved the transportation of Head Start children to various programs, as well as other duties for HDC. Appellant's supervisor was Lois Harris, the Director of Head Start, who was also the person who conducted the investigation into his involvement in the alleged fight, and who recommended the termination of his employment. Secondly, there was evidence that Head Start Policy Council approval was sought and granted for the original hiring of appellant in 1978, and further that approval of appellant's termination was sought, though not obtained. Thirdly, although appellant was paid from the indirect cost budget of HDC, approximately 61% of that budget--$138,135 of a total budget of $225,340--came directly from Head Start funds. Lastly, defendant's amended answer acknowledges that appellant was an employee of Head Start. ² We conclude that appellant was in fact an employee of Head Start. ³

We next examine the issue of whether Head Start Policy Council approval was necessary before appellant's employment could be effectively terminated. A review of the applicable federal statutes and regulations, as well as case law, supports appellant's contention. Project Head Start is a federally funded program which is administered locally by public or private nonprofit agencies designated as Head Start agencies by the Secretary of the Department of Health and Human Services. 42 U.S.C.A. § 9836 (1981). Federal funding of the Head Start program is partial in nature, with a ceiling of 80% of approved costs to come from federal contributions. 42 U.S.C.A. § 9835(b)(1981). In light of this, the fact that 61% of defendant HDC's indirect cost budget came from Head Start contributions is persuasive that federal statutory and regulatory requirements are implicated.

It is well settled that Congress may prescribe the conditions upon which federal monies may be granted. "Of course since the community action agencies receive federal funding, they must comply with extensive regulations which include employment policies and procedures, lobbying limitations, accounting and inspection procedures, expenditure limitations, and programmatic limitations and application procedures." United States v. Orleans, 425 U.S. 807,...