Hammond v. North Dakota State Personnel Bd.

• Decision Date: 23 February 1984
• Docket Number: No. 10536,10536
• Citation: 345 N.W.2d 359
• Parties: 108 Lab.Cas. P 55,847 Howard HAMMOND, Plaintiff and Appellant, v. NORTH DAKOTA STATE PERSONNEL BOARD, Defendant and Appellee. Civ.
• Court: North Dakota Supreme Court

Page 359

345 N.W.2d 359

108 Lab.Cas. P 55,847

Howard HAMMOND, Plaintiff and Appellant, v. NORTH DAKOTA STATE PERSONNEL BOARD, Defendant and Appellee.

Civ. No. 10536.

Supreme Court of North Dakota.

Feb. 23, 1984.

Zuger & Bucklin, Bismarck, for plaintiff and appellant; argued by James S. Hill, Bismarck.

Kathryn L. Dietz, Asst. Atty. Gen., Bismarck, for defendant and appellee; argued by Kathryn L. Dietz, Bismarck. Appearance by Marilyn Foss, Asst. Atty. Gen., Bismarck.

ERICKSTAD, Chief Justice.

This is an appeal by Howard Hammond from a judgment of the District Court of Burleigh County affirming a decision of the State Personnel Board (the Board) sustaining Hammond's termination as Chief Chemist of the State Laboratories Department. We reverse and remand for a redetermination by the Board.

Hammond, an employee of the State of North Dakota for over 42 years, was fired on March 31, 1982, by the department director, Charlene Seifert. Hammond appealed to the Board, which sustained his termination. Hammond then appealed the Board's decision to the district court which dismissed the appeal for lack of subject matter jurisdiction. In Hammond v. North Dakota State Personnel Board, 332 N.W.2d 244 (N.D.1983), this Court reversed the district court's dismissal and remanded for a determination of Hammond's appeal on its merits. Hammond has now appealed from the district court's judgment affirming, on its merits, the Board's decision to sustain Hammond's termination.

A formal hearing was held on Hammond's appeal to the Board during May 14, 15, and 17, 1982, before Peg Ralston, Director of the Central Personnel Division, who was appointed by the Board as the hearing examiner for the case. At the hearing, Hammond offered into evidence, without objection, portions of the State of North Dakota Personnel Policies Manual (the Manual). The Manual contains provisions setting forth the grounds upon which a classified state employee can be terminated. It is undisputed that Seifert, the hearing examiner, and the Board acted under the provisions of and in accordance with the rights and procedures set forth in the Manual.

We take judicial notice that no portion of the Manual has been published in the North Dakota Administrative Code. Consequently, it is questionable whether or not the Manual provisions have been properly promulgated as agency rules. See, Section 28-32-03, N.D.C.C.; See also, Hammond v. North Dakota State Personnel Board, 332 N.W.2d 244 (N.D.1983) (Justice VandeWalle specially concurring). However, that issue has not been raised or briefed by either party. Irrespective of whether or not the Manual provisions constitute validly promulgated agency rules, we conclude that they are binding as a part of the employment relationship between the State Laboratories Department and Howard Hammond. The Manual, which was published and implemented by the Central Personnel Division, was held out by the State as providing the "policy and procedure" for state employees in their employment relationships with state agencies.

Through Executive Order No. 1981-10, Governor Allen I. Olson ordered:

"[T]hat agencies headed by a gubernatorial appointee adhere to and follow the North Dakota Personnel Policies to provide fair, equitable, and uniform treatment to all classified employees. This shall include the administrative statewide appeal mechanism which attempts to resolve bona fide employee complaints at the lowest possible level."

The State, and more specifically the State Laboratories Department in this case, having promulgated the Manual provisions as its personnel policy and procedure, must be held accountable under those provisions in its employment relationship with Howard Hammond. See, Pine River State Bank v. Mettille, 333 N.W.2d 622 (Minn.1983); Toussaint v. Blue Cross & Blue Shield of Michigan, 408 Mich. 579, 292 N.W.2d 880 (1980); DeFrank v. County of Greene, 50 Pa.Commw. 30, 412 A.2d 663 (1980). See also, Zimmerman v. Minot State College, 198 N.W.2d 108 (N.D.1972).

In DeFrank, supra, Greene County asserted that its personnel manual did not operate to establish employee rights with regard to dismissals from employment because the manual, promulgated by a past administrator, had not been adopted or ratified by any formal action of the county commissioners. In holding that the county was estopped from denying the validity of the manual and its binding effect on the county with regard to its employment relationships, the Commonwealth Court of Pennsylvania succinctly explained its rationale with which we agree:

"We believe that an employee's expectation of the operative validity of a document is fully reasonable when that document is held out by her superiors, to both the employee and the state, as an embodiment of the personnel policy of the employer. To allow a political entity to represent to its employees, through its chief administrators, their 'right to a hearing' and an assurance of 'job security', and then to permit that entity to disavow those words of entitlement when an employee takes those words at their face value, would violate any conception of fundamental fairness. To reject an estoppel here would amount to placing our imprimatur upon an inequitable manipulation of employees' legitimate expectations as to the stated terms and conditions of their relationship with their employer." 412 A.2d at 666-667.

We conclude in this case that the provisions of the Manual, under which the parties have voluntarily operated, provide the standard by which Hammond's termination must be reviewed. With regard to that standard, the relevant provisions of the Manual, at the time of Hammond's dismissal, read:

"8-4-1 The appointing authority may dismiss an employee for inefficiency, insubordination, misconduct, or other just cause. A written statement of reasons for the dismissal shall be submitted to the employee. A permanent employee shall have the right to appeal.

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"9-4-11 'Cause' means that taking disciplinary action is for substantial reasons related to the employee's job duties, job performance or working relationships and the action taken is appropriate."

Thus, to sustain Hammond's dismissal, the Board was required to determine whether or not there was just cause as provided for and defined by the Manual.

In her termination memorandum, dated March 31, 1982, Seifert stated the reasons for Hammond's dismissal which we summarize as follows:

(1) "... unable to answer basic and elementary chemical questions relating to instrumentation in the laboratory area.... Paramount is his lack of basic skills in order to function as a Chief Chemist and his inability to learn those skills."

(2) Inappropriate "attitude toward management" and "destructive, uncooperative, disloyal attitude...." Inability "to function as an effective supervisory team member." Failure "to comply with management's wishes and directives to function as efficiently as possible in the position as chief Chemist."

(3) Failure to develop into a "loyal, cooperative, productive employee despite repeated opportunities to do so."

(4) "[P]oor attitude and poor performance have seriously hampered the overall operation of the Laboratories Department."

It was the responsibility of the Board to make findings as to whether or not the reasons for dismissal given by Seifert were supported by the evidence and to enter a conclusion as to whether or not the reasons supported by the evidence constituted just cause.

Before the Board made its decision on this case, Hammond requested Board member Lieutenant Governor Sands to recuse himself from acting in the case because of a conflict of interest. Sands refused to do so. On appeal, Hammond asserts that Sands should not have acted in this case as a member of the Board because, at the time the Board acted, Sands was also the acting chairman of the State Laboratories Commission which oversees the director of the State Laboratories Department and has, in effect, the power to hire and fire the director. Hammond asserts that there was a conflict of interest between Sands' position as acting chairman of the State Laboratories Commission while at the same time acting as a member of the Board with the responsibility of evaluating Hammond's termination by Director Seifert. We conclude that Hammond was not entitled to have Sands recuse himself as a member of the Board under the circumstances. The fact that Sands, acting as a member of the State Laboratories Commission, had authority to oversee the actions of Director Seifert does not, without more, result in a conflict of interest, which would disable him from making a fair and impartial decision regarding the director's dismissal of a department employee.

On appeal, Hammond asserts that the procedures utilized by the Board in arriving at its decision to sustain Hammond's dismissal did not afford him the minimum requirements of a fair hearing to which he was entitled under the Administrative Agencies Practice Act, Chapter 28-32, N.D.C.C. We agree.

Hammond's hearing, involving three days of testimony and resulting in over 900 pages of transcript, was conducted before a hearing examiner with no members of the Board present at any time. The Board rendered its decision approximately one week following the conclusion of the hearing. Although recorded tapes of the hearing were available to the Board prior to the date of its decision, written transcripts of the proceedings were not prepared until after the Board had acted. On June 21, 1982, approximately one month after the Board's decision, it held a special meeting to consider Hammond's request for a rehearing. It is evident, upon reviewing the transcript of that meeting, that the Board had followed a policy, in...