Hy-Vee Food Stores, Inc. v. Iowa Civil Rights Com'n

• Decision Date: 24 January 1990
• Docket Number: No. 88-934,HY-VEE,88-934
• Citation: 453 N.W.2d 512
• Parties: 57 Fair Empl.Prac.Cas. (BNA) 1459, 53 Empl. Prac. Dec. P 39,875 FOOD STORES, INC., Appellant, v. IOWA CIVIL RIGHTS COMMISSION, Appellee.
• Court: Iowa Supreme Court

Page 512

453 N.W.2d 512

57 Fair Empl.Prac.Cas. (BNA) 1459,

53 Empl. Prac. Dec. P 39,875

HY-VEE FOOD STORES, INC., Appellant, v. IOWA CIVIL RIGHTS COMMISSION, Appellee.

No. 88-934.

Supreme Court of Iowa.

Jan. 24, 1990.

Rehearing Denied March 21, 1990.

Stephen Meyer of the Meyer Law Firm, Chariton, for appellant.

Thomas J. Miller, Atty. Gen., Rick Autry, Asst. Atty. Gen., and Steven M. Foritano, Asst. Atty. Gen., for appellee.

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

LAVORATO, Justice.

Hoa Thi Blood, a woman of Vietnamese origin, was employed by Hy-Vee Stores, Inc., as a checker in one of the company's grocery stores. The Iowa Civil Rights Commission found that Hy-Vee had discriminated against Blood on the basis of sex and national origin when it failed to promote her or give her more hours of work. Hy-Vee sought judicial review in the district court of the commission's decision. The district court ruled that substantial evidence supported the commission's finding of discrimination and most of the relief the commission had granted. Hy-Vee appealed and the commission cross-appealed. We affirm on the appeal and affirm in part and reverse in part on the cross-appeal.

On February 9, 1984, Blood filed a complaint against Hy-Vee with the Iowa Civil Rights Commission and the Cedar Rapids Civil Rights Commission. See Iowa Code § 601A.15(1) (1983). She alleged that Hy-Vee had discriminated against her on the basis of national origin and in retaliation for her complaint against Hy-Vee in 1977. See Iowa Code §§ 601A.6(1)(a); 601A.11(2). She later amended her complaint, alleging that Hy-Vee also discriminated against her on the basis of sex. See Iowa Code § 601A.6(1)(a).

The Cedar Rapids Civil Rights Commission staff investigated the complaint and recommended a determination that probable cause existed for the complaint. See Iowa Code § 601A.15(3)(a). Both the city and state commissions adopted this recommendation. Adoption of this recommendation triggered conciliation efforts between Blood and Hy-Vee. See Iowa Code § 601A.15(3)(c), (d). These efforts, however, were unsuccessful. The state commission then set the matter for hearing as a contested case. See Iowa Code § 601A.15(5), (6), (7).

Following the hearing, the hearing officer filed proposed findings of fact and conclusions of law. See Iowa Code § 601A.15(8). The hearing officer found that Hy-Vee had not discriminated against Blood on the basis of retaliation but had discriminated against her on the basis of sex and national origin. The hearing officer proposed certain class relief against Hy-Vee including an affirmative action plan. As to Blood the hearing officer proposed a promotion, back pay with full-time status to 1977, additional hours, front pay, and back pay at an increased rate to 1983. The hearing officer also proposed that Blood be denied punitive and emotional distress damages.

Hy-Vee appealed to the state commission. See Iowa Code § 17A.15(3). The commission adopted the hearing officer's proposed decision with two exceptions: it allowed $15,000 in punitive damages and $10,000 in compensatory damages for emotional distress. See Iowa Code §§ 17A.15(2), (3); 601A.15(8)(a)(7). Hy-Vee requested a rehearing, which the commission denied. See Iowa Code § 17A.16(2).

Hy-Vee then filed a petition for judicial review in the district court. See Iowa Code §§ 601A.17(1); 17A.19. The district court vacated the award of punitive damages; this portion of the court's ruling is not challenged on appeal. The court also vacated the award of additional hours, front pay, and back pay at an increased rate to June 1983. The court failed to consider the award of back pay at full time status to 1977. Finally, the court found that Blood filed her complaint in time and that the commission's violation of its rules on oral argument was harmless error. The court affirmed the commission's decision in all other respects.

Hy-Vee appealed and the commission cross-appealed. See Iowa Code § 17A.20. We first consider the issues raised in Hy-Vee's appeal and then the issues raised in the commission's cross-appeal.

Judicial review of the commission's findings is governed exclusively by the Iowa Administrative Procedure Act. Iowa Code §§ 17A.19; 601A.17(1). Our review of the district court's ruling is at law. Id. at § 17A.20; Iowa Civil Rights Comm'n v. Woodbury County Community Action Agency, 304 N.W.2d 443, 446 (Iowa App.1981).

Under section 17A.19, the district court acted in an appellate capacity to correct errors of law specified for contested cases in section 17A.19(8)(f). Our review then is limited to determining whether the district court correctly applied the law. If we find the court did correctly apply the law, we affirm. Otherwise, we reverse. Iowa Civil Rights Comm'n v. Woodbury County, 304 N.W.2d at 446.

In deciding whether the district court correctly applied the law, we ask whether the commission's findings are supported by substantial evidence in the record as a whole. Iowa Code § 17A.19(8)(f); Iowa Civil Rights Comm'n v. Woodbury County, 304 N.W.2d at 446. Evidence is substantial if a reasonable person would find it adequate to reach the given conclusion, even if we might draw a contrary inference. Chauffeurs, Teamsters & Helpers, Local 238 v. Iowa Civil Rights Comm'n, 394 N.W.2d 375, 379 (Iowa 1986).

The district court found that there was substantial evidence to support the commission's finding of employment discrimination based on sex and national origin. The district court also found that there was substantial evidence to support the commission's award for emotional distress. On appeal Hy-Vee challenges these findings. Hy-Vee also challenges the district court's findings that Blood filed her complaint in time and that the commission's violation of its rules on oral argument was harmless error.

I. Employment Discrimination Theories.

Blood based her employment discrimination claims on alleged violations of Iowa Code section 601A.6(1)(a). Among other things, this statute prohibits any person from discriminating in employment against any employee because of sex or national origin.

The United States Supreme Court recognizes two theories to prove employment discrimination under Title VII of the Civil Rights Act of 1964. One is the disparate treatment theory and the other is the disparate impact theory. Holdeman, Watson v. Ft. Worth Bank & Trust: The Changing Face of Disparate Impact, 66 Den.U.L.Rev. 179, 180 (1989). Because the commission used the two theories, we discuss both.

The two theories are defined in International Brotherhood of Teamsters v. United States:

"Disparate treatment" ... is the most easily understood type of discrimination. The employer simply treats some people less favorably than others because of their race, color, religion, sex, or national origin. Proof of discriminatory motive is critical, although it can in some situations be inferred from the mere fact of differences in treatment.

....

Claims of disparate treatment may be distinguished from claims that stress "disparate impact." The latter involves employment practices that are facially neutral in their treatment of different groups but that in fact fall more harshly on one group than another and cannot be justified by business necessity. Proof of discriminatory motive, we have held, is not required under a disparate-impact theory. Either theory may, of course, be applied to a particular set of facts.

431 U.S. 324, 335, n. 15, 97 S.Ct. 1843, 1854, n. 15, 52 L.Ed.2d 396, 415, n. 15 (1977) (citations omitted). In short, the disparate treatment theory focuses on the employer's motivation; the disparate impact theory focuses on the consequences of the employer's conduct.

A. Disparate treatment. We recently summarized the analytical framework for allocating the burden and order of presentation of proof under chapter 601A in Hamilton v. First Baptist Elderly Hous. Found., 436 N.W.2d 336 (Iowa 1989). We borrowed this framework of analysis from two United States Supreme Court decisions, which applied it to Title VII cases: McDonnell Douglas Corp. v. Green, 411 U.S. 792, 93 S.Ct. 1817, 36 L.Ed.2d 668 (1973) and Texas Dep't of Community Affairs v. Burdine, 450 U.S. 248, 101 S.Ct. 1089, 67 L.Ed.2d 207 (1981). See Hamilton, 436 N.W.2d at 338-39.

There are three stages in this analysis. In the first stage the employee must establish a prima facie case of intentional discrimination by a preponderance of the evidence. Hamilton, 436 N.W.2d at 338. An employee establishes a prima facie case by showing that (1) the employee belonged to a protected group, (2) the employee made application and was qualified for a job for which the employer was seeking applicants, (3) the employee was rejected, (4) the position remained open and the employer continued to seek applicants with similar qualifications. Once the prima facie case is established, a presumption arises that the employer discriminated against the employee. Id.

In the second stage the employer must go forward with evidence to rebut the presumption of discrimination. The employer does so by producing evidence that the employee was not hired or promoted for a legitimate, nondiscriminatory reason. Id.

In the third stage the employee has the burden to show that the employer's proffered reason was not the true reason for the employment decision. The employee may meet this burden in two ways. The employee may directly persuade the fact finder that a discriminatory reason more likely motivated the employer or may indirectly show the employer's proffered reason is not worthy of belief. Id. at 339.

In all three stages the burden of persuasion rests with the employee. The only burden the employer shoulders is the burden to go forward with the evidence to rebut the presumption of discrimination. Id. at 338.

McDonnell Douglas and Burdine involved "pretext" cases--the employer's stated reasons for the...