Graham v. Special School Dist. No. 1
| Decision Date | 12 July 1991 |
| Docket Number | No. C8-90-1009,C8-90-1009 |
| Citation | 472 N.W.2d 114 |
| Parties | 69 Ed. Law Rep. 543 Teresa M. GRAHAM, Petitioner, Appellant, v. SPECIAL SCHOOL DISTRICT NO. 1, et al., Respondents. |
| Court | Minnesota Supreme Court |
Syllabus by the Court
Findings that certain teacher misconduct occurred, which were made in quasi-judicial teacher termination proceeding, are entitled to collateral estoppel effect in the teacher's defamation action. Findings made in the termination proceeding are not, however, entitled to collateral estoppel effect in the teacher's retaliatory discharge and free speech violation claims.
James V. Roth, Leonard, Street & Deinard, Minneapolis, for appellant.
Donald M. Lewis, Popham, Haik, Schnobrich & Kaufman, Minneapolis, for respondents.
Heard, considered, and decided by the court en banc.
This case asks whether certain factual determinations made in a teacher termination proceeding may, by reason of collateral estoppel, preclude the teacher from relitigating those issues in a subsequent lawsuit.
On March 11, 1988, Teresa Graham, a social worker at the Ramsey Preschool Center, was suspended with pay pending an investigation of her "work behavior." Two weeks later Graham started a lawsuit against the school district alleging defamation and retaliatory discrimination. Later that year, in the fall, the district commenced termination proceedings. A 9-day hearing was held before a hearing examiner. The examiner concluded that grounds for Graham's termination had been established by substantial and competent evidence and recommended Graham's discharge.
The school board accepted the examiner's report and recommendation and discharged Graham in February 1989. Graham then amended her pending tort action to add a claim for deprivation of her First Amendment free speech rights. She also appealed the school board's decision. The court of appeals, in an unpublished opinion dated August 16, 1989, affirmed the termination, and this court denied further review.
The school district then moved to amend its answer in plaintiff's tort action to allege collateral estoppel and for summary judgment. The trial court allowed the amendment and granted summary judgment to the school district. Summary judgment was granted on the sole grounds that collateral estoppel precluded plaintiff from relitigating certain factual issues essential to her causes of action which had been decided adversely to her in the school termination proceedings. The court of appeals affirmed the trial court. Graham v. Special School Dist. No. 1, 462 N.W.2d 78 (Minn.App.1990). We granted Graham's petition for further review.
The main issue in this appeal is whether the doctrine of collateral estoppel should apply to issues adjudicated in a school board proceeding to terminate a teacher so as to defeat plaintiff's tort claims for defamation, retaliatory discharge and deprivation of rights of free speech.
We have said that res judicata may apply to administrative decisions when an agency acts in a judicial or quasi-judicial capacity. McKee v. County of Ramsey, 310 Minn. 192, 194, 245 N.W.2d 460, 462 n. 1 (1976). That being so, we believe that the companion doctrine of collateral estoppel (issue preclusion) may also apply, in appropriate instances, to agency decisions. For collateral estoppel to apply,
1) the issue to be precluded must be identical to the issue raised in the prior agency adjudication, Ellis v. Minneapolis Comm'n of Civil Rts., 319 N.W.2d 702, 704 (Minn.1982);
2) the issue must have been necessary to the agency adjudication and properly before the agency, United States v. Utah Constr. & Mining Co., 384 U.S. 394, 422, 86 S.Ct. 1545, 1560, 16 L.Ed.2d 642 (1966);
3) the agency determination must be a final adjudication subject to judicial review, Utah Construction, supra; Ellis, supra;
4) the estopped party was a party or in privity with a party to the prior agency determination, Ellis, supra; and
5) the estopped party was given a full and fair opportunity to be heard on the adjudicated issue, Ellis, supra.
In a teacher termination proceeding, the school board acts in a quasi-judicial capacity. See Morey v. School Bd. of Ind. Sch. Dist. No. 492, 271 Minn. 445, 448-49, 136 N.W.2d 105, 107-08 (1965). The decision is subject to judicial review; indeed, in this case the school board decision was reviewed and affirmed by the court of appeals.
Consequently, this appeal centers on whether the issues sought to be precluded from relitigation are identical to those in the tort action, whether they were properly before the school board, and whether Graham received a full and fair hearing on the issues in the teacher termination proceeding.
First of all, we conclude that certain factual issues which will arise in the court actions for defamation, retaliatory discharge, and free speech violations also arose and were decided in the teacher termination proceeding.
Termination proceedings focus on whether there are statutory grounds for discharge. 1 Here Graham was charged with inefficiency in teaching, insubordination, and conduct unbecoming a teacher, Minn.Stat. Sec. 125.17, subd. 4(1) & (3) (1990), all as more particularly set out in a 12-page bill of particulars describing the incidents of misbehavior. The hearing examiner made 52 findings of fact relating to these incidents and concluded that inefficiency in teaching, insubordination, and conduct unbecoming a teacher had been proven.
Plaintiff Graham's complaint alleges she was defamed by statements made in a March 11, 1988, memo prepared and circulated by Keith Kromer, the Director of Special Education. 2 Her complaint asserts that "[t]he accusations forming the basis of Plaintiff's suspension from employment are false * * *."
We have no difficulty concluding that the factual issues of misconduct dealt with in the termination proceeding and decided adversely to the teacher are the same factual issues on which plaintiff bases her defamation action, namely, Graham's fitness to teach. As to the defamation count, the school district has satisfied the "identical issues" requirement for collateral estoppel.
In the termination proceedings Graham contended that her proposed discharge was in retaliation for her reporting possible violations in school programs to the State Department of Education. While the hearing examiner found that some of Graham's complaints made to the Department of Education had been substantiated, she also found that the termination proceedings were not retaliatory. We conclude, therefore, that the factual issue of retaliation raised in the termination proceeding is the same as the retaliation issue Graham proposes to litigate in her court action for retaliatory discharge.
Graham's third cause of action is a claim under 42 U.S.C. Sec. 1983 for denial of her constitutional right of free speech. Presumably Graham claims that she was discharged because she exercised her right of free speech to complain to the State Department of Education about the school's programs not being in compliance with governmental regulations. 3 The hearing examiner did not rule on this free speech claim because Graham was not making the claim at the time of the hearing. It is evident, however, that the factual basis for the free speech violation is the same as for the retaliatory discharge claim.
We next must decide whether the factual issues common to both the school board termination proceedings and the court action were properly before the factfinder in the termination proceeding. To put it another way, did the factfinder have jurisdiction to decide the issues for which collateral estoppel effect is now claimed?
Graham argues that the school board does not have jurisdiction to decide causes of action for defamation, retaliatory discharge, and free speech denial. True enough, but nobody is making such a claim. The school district is not asking for a res judicata bar; it is asking only for collateral estoppel, i.e., for preclusion of certain factual issues which are common to both the termination proceeding and the tort actions.
The school district claims the defamation action must be dismissed because the statements alleged to be defamatory were found to be true in the teacher termination proceeding. Clearly, these issues relating to the teacher's conduct were properly before the hearing examiner.
The issue of retaliatory discharge is more of a problem. At the termination hearing, Graham announced she was raising the affirmative defense of retaliatory discharge, relying apparently on Minn.Stat. Sec. 181.932, subd. 1(a) (1990), which prohibits discharging an employee in retaliation for "whistle-blowing." The hearing transcript reveals that the parties were never quite comfortable with this issue. The school board's attorney both conceded and denied that the retaliatory discharge defense was properly before the hearing examiner for resolution; in any event, contrary to Graham's contention made to us, the hearing examiner did entertain the defense, overruled the school board's objections, allowed Graham to present her defense fully, and decided the issue of retaliation against her. 4
Because the retaliation defense relates to the school district's own conduct and not the teacher's, it can be argued, we suppose, that retaliation is not an issue properly before the hearing examiner, at least not completely. Nevertheless, it seems to us the factual issues related to retaliation are so intertwined with the statutory grounds for discharge that the factfinder must deal with them, even though the primary purpose of the proceeding is to determine if statutory grounds for discharge exist.
This brings us to the requirement of a "full and fair" hearing. Here, in accordance with established procedures, the hearing was presided over by an impartial hearing examiner, a former trial judge. Both parties were entitled to representation and were represented by counsel. Subpoenas...
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