Hamilton v. First Baptist Elderly Housing Foundation, 87-369

• Decision Date: 22 February 1989
• Docket Number: No. 87-369,87-369
• Citation: 436 N.W.2d 336
• Parties: 58 Fair Empl.Prac.Cas. (BNA) 243, 50 Empl. Prac. Dec. P 39,038, 7 IER Cases 1773 Margie Sue HAMILTON, a/k/a Margie Sue Sobotka, Appellant, v. FIRST BAPTIST ELDERLY HOUSING FOUNDATION, d/b/a Elsie Mason Manor, Appellee.
• Court: Iowa Supreme Court

Page 336

436 N.W.2d 336

58 Fair Empl.Prac.Cas. (BNA) 243,

50 Empl. Prac. Dec. P 39,038, 7 IER Cases 1773

Margie Sue HAMILTON, a/k/a Margie Sue Sobotka, Appellant, v. FIRST BAPTIST ELDERLY HOUSING FOUNDATION, d/b/a Elsie Mason Manor, Appellee.

No. 87-369.

Supreme Court of Iowa.

Feb. 22, 1989.

Thomas J. McCann of Peddicord, Wharton, Thune, Foxhoven & Spencer, Des Moines, for appellant.

Patricia Shoff and Diane M. Stahle of Davis, Hockenberg, Wine, Brown, Koehn & Shors, Des Moines, for appellee.

Considered by McGIVERIN, C.J., and LAVORATO, NEUMAN, SNELL, and ANDREASEN, JJ.

LAVORATO, Justice.

The First Baptist Elderly Housing Foundation, d/b/a Elsie Mason Manor (Manor), terminated the employment of Margie Sue Sobotka (formerly Margie Sue Hamilton). She sued the Manor on three theories: (1) sex discrimination, (2) breach of an employment contract, and (3) violation of public policy. The district court concluded that Margie had failed to prove any of the three theories. She appealed from this decision, and we transferred the case to the court of appeals. Because the court of appeals was equally divided, the district court's judgment was affirmed by operation of law. See Iowa Code § 602.5106(1) (1987). We granted Margie's application for further review, and we now affirm.

I. Background Facts.

The Manor is a housing project for elderly and handicapped persons of low and moderate income. The project is sponsored by the First Baptist Church in Des Moines. The Department of Housing and Urban Development (HUD) has been financing the project on a twenty-year contract since 1980. All of the apartments in the Manor are subsidized by HUD except for one 2-bedroom unit.

Two boards have oversight responsibility for the project. One, the First Baptist Elderly Housing Foundation Board (Foundation Board), is the borrowing entity. The other, the First Baptist Housing Management Board (Management Board), is responsible for the day-to-day management of the project. Both are nonprofit organizations with little outside income. One important and pragmatic reason for having two separate boards is a HUD requirement that a management fee can be paid to a management company but not to a borrowing one. The Management Board has the responsibility for hiring the Manor's administrator. It hired the first one, Royce Jones, in September 1981.

Under the HUD financing arrangement and the rent subsidy contract, on-site management was required. The project was thus designed so the apartment that was not eligible for a rent subsidy would be occupied by the on-site manager as part of the manager's pay package.

Later, the Management Board decided that the apartment should be occupied by the building superintendent rather than the administrator. The rationale was that the administrator would need to be a person of the caliber who would desire a home, possibly have a family, and command an income more substantial than was earlier contemplated. The Board realized that it would be impractical to expect that type of person to occupy the on-site apartment. The Board, however, still felt it was necessary for a person from management to live onsite. Such an arrangement would meet the HUD requirement of on-site management and would give residents twenty-four-hour service.

Thereafter, in November 1981, the Manor placed an ad with the Iowa Department of Job Service seeking to fill two open positions: janitor and building superintendent.

The openings were advertised as two separate positions. Further, only the job description for the superintendent made on-site living a condition of employment. The janitor's job description was silent on the matter. The superintendent's job description also provided that a rental value would be placed on the superintendent's apartment and on the utilities furnished for it. The document specified that the rental value would be considered to be part of the superintendent's pay package.

Notwithstanding the two job descriptions, there is substantial evidence to support the district court's finding that Margie and Pat Hamilton, her husband at the time, were eventually hired as a team and required to live in the apartment set aside for that purpose. Further, each was required to report one-half of the rental value for tax purposes.

In addition to the janitorial job description, Margie was given a list of Manor personnel policies when she started her employment in November 1981. The policies were somewhat modified in 1982 and placed in an employee handbook. In essence, the original and modified policies provided, among other things, a list of infractions described as noninclusive that would subject an employee to disciplinary action, the most serious of which was employment termination.

As the district court found, the couple lived on site and performed as a team until March 1983, when both were dismissed. Shortly before the couple was dismissed, the Manor discovered that Pat had been circulating notes that were threatening to Jones, the administrator. Margie, until this time, had satisfactorily performed all of her assigned duties. Further, there was no evidence suggesting that she had participated in, or had had knowledge of, her husband's activities with the notes.

The decision to terminate Margie's employment was made by the administrator and confirmed by the Management Board. This decision was based, in part, on the fact that termination of Pat's employment necessarily destroyed the team concept and thereby the couple's ability to provide twenty-four-hour service. Further, the Board and the administrator were concerned that Margie's effectiveness would be hampered by resentment arising out of the note incident involving Pat.

The case was tried to the court as a law action. Thus, our review is for correcting errors of law. See Iowa R.App.P. 4. In such cases, findings of fact have the effect of a special verdict and are binding on us if supported by substantial evidence. Evidence is substantial when a reasonable mind could accept it as adequate to reach the same findings. Norland v. Iowa Dep't of Job Serv., 412 N.W.2d 904, 913 (Iowa 1987).

II. Sex Discrimination.

Margie first contends that the district court erred when it dismissed her sex discrimination claim because she had failed to prove the claim by a preponderance of the evidence. The district court found that Margie had established a prima facie case of sex discrimination. But it also found that the Manor had articulated a legitimate, nondiscriminatory reason for her discharge that Margie had not proven was a mere pretext for sex discrimination. Upon our review of the entire record, we are convinced the district court was right.

Margie premises her sex discrimination claim on an alleged violation of Iowa Code section 601A.6(1)(a) (1981). This statute prohibits, among other things, discharge of an employee because of sex.

An analytical framework for the basic allocation of burdens and order of presentation of proof in cases alleging discriminatory treatment was first set forth in McDonnell Douglas Corp. v. Green, 411 U.S. 792, 93 S.Ct. 1817, 36 L.Ed.2d 668 (1973). First, the plaintiff has the burden of establishing by a preponderance of the evidence a prima facie case of discrimination. Second, once such a prima facie case is established, the burden shifts to the defendant "to articulate some legitimate, nondiscriminatory reason for the employee's [discharge]." Third, if the defendant succeeds, the plaintiff must then prove by a preponderance of the evidence that the legitimate reason offered by the defendant was not the defendant's true reason but, rather, a pretext for discrimination. Id. at 802-04, 93 S.Ct. at 1824-25, 36 L.Ed.2d at 677-79; see also Linn Co-Op. Oil Co. v. Quigley, 305 N.W.2d 729, 732-33 (Iowa 1981) (McDonnell Douglas analytical framework applied in sex discrimination discharge case).

The ultimate burden of persuading the trier of fact of the discriminatory treatment rests with the plaintiff and never shifts. When the plaintiff establishes a prima facie case, a presumption arises that the defendant employer discriminated against the plaintiff. If the trier of fact believes the plaintiff's evidence and if the defendant does nothing in the face of the presumption, judgment must be entered for the plaintiff because no issue of fact remains. Texas Dep't of Community Affairs v. Burdine, 450 U.S. 248, 253-54, 101 S.Ct. 1089, 1094, 67 L.Ed.2d 207, 215-16 (1981).

The burden that shifts to the defendant is the burden to go forward with evidence to rebut the presumption of discrimination. This burden involves producing evidence that the plaintiff was discharged for a legitimate, nondiscriminatory reason. It is enough if the defendant raises a genuine issue of material fact as to whether the defendant discriminated against the plaintiff. The defendant is not required to persuade the court that the defendant was actually motivated by the proffered reason. Id. at 254, 101 S.Ct. at 1094, 67 L.Ed.2d at 216. The defendant's evidence, however, must clearly set forth through admissible evidence its reason for the discharge. The explanation has to be legally sufficient to justify a judgment for the defendant. Id. at 255, 101 S.Ct. at 1094, 67 L.Ed.2d at 216. More specifically, the prima facie case of discrimination will be rebutted if the employer produces admissible evidence "which would allow the trier of fact rationally to conclude that the employm

ent decision had not been motivated by discriminatory animus." Id. at 257, 101 S.Ct. at 1096, 67 L.Ed.2d at 218.

Once the defendant has carried this burden, the plaintiff has the opportunity to show that the proffered reason was not the true reason for the employment decision. At this point, the plaintiff's burden merges with the ultimate burden of persuading the court that the plaintiff has been the victim of discrimination. The plaintiff may carry this burden either directly by persuading the...