Indiana Civil Rights Commission v. Sutherland Lumber, 3-378A52

• Decision Date: 19 September 1979
• Docket Number: No. 3-378A52,3-378A52
• Citation: 182 Ind.App. 133,394 N.E.2d 949
• Parties: , 26 Fair Empl.Prac.Cas. (BNA) 834, 21 Empl. Prac. Dec. P 30,403 The INDIANA CIVIL RIGHTS COMMISSION, and Thomas E. Gerardot and Walter J. Burton, Appellants (Respondents Below) v. SUTHERLAND LUMBER, Fort Wayne, Appellee (Petitioner Below).
• Court: Indiana Appellate Court

Page 949

394 N.E.2d 949

182 Ind.App. 133, 26 Fair Empl.Prac.Cas. (BNA) 834,

21 Empl. Prac. Dec. P 30,403

The INDIANA CIVIL RIGHTS COMMISSION, and Thomas E. Gerardot and Walter J. Burton, Appellants (Respondents Below) v. SUTHERLAND LUMBER, Fort Wayne, Appellee (Petitioner Below).

No. 3-378A52.

Court of Appeals of Indiana, Third District.

Sept. 19, 1979.

Theo. L. Sendak, Atty. Gen., Dennis K. McKinney, Deputy Atty. Gen., Indianapolis, for appellants.

N. Reed Silliman, Fort Wayne, Allan L. Bioff and Leonard Singer, Kansas City, Mo., for appellee.

STATON, Judge.

Thomas E. Gerardot and Walter J. Burton were employed by Sutherland Lumber, Fort Wayne, a retail lumber yard in Fort Wayne, Indiana. When Gerardot and Burton failed to comply with certain uniform grooming standards, Sutherland terminated its employment of them. Gerardot and Burton filed separate complaints with the Indiana Civil Rights Commission (ICRC), each alleging that he was the victim of sex discrimination because of refusal to shave off his moustache as required by Sutherland's grooming standards. After a hearing on the consolidated complaints, the ICRC ordered Sutherland to reimburse Gerardot and Burton for lost wages; to offer reinstatement to Burton; and to revoke its policy forbidding employees from having moustaches or beards.

Sutherland appealed to a trial court, which reversed the order and set it aside. The trial court found the order to be arbitrary, capricious, not in accordance with the law, in excess of statutory authority and unsupported by substantial evidence.

We affirm.

Gerardot commenced working for Sutherland in the spring of 1972. Burton was hired by Sutherland in mid-1971. Sutherland required that all of its employees, regardless of their sex, maintain a neat and clean personal appearance in accordance with Sutherland's uniform grooming policy. The policy's prohibition against moustaches had been relaxed by the yard manager in Fort Wayne as long as moustaches were kept neat and trimmed. Subsequently, Sutherland determined that some employees were abusing the relaxed rule and reimposed the requirement that all employees be clean shaven. Gerardot refused to remove his moustache and was fired on September 25, 1972. Burton also refused to comply and his employment was terminated as of October 15, 1972. Other employees affected by the reimposition of the rule regarding facial hair complied with the company's grooming policy and remained employed.

I. Standard of Review

The ICRC argues that its decision was supported by substantial evidence. When the ICRC renders a decision after a hearing, it is required ¹ to include findings of fact on determinations material to its ultimate conclusions. To challenge the administrative decision, ² a party appeals to a trial court, pursuant to the Indiana Administrative Adjudication Act (the Act), IC 1971, 4-22-1-1 Et seq., Ind.Ann.Stat. § 63-3001 Et seq. (Burns Code Ed.).

The Legislature set out the procedure under the Act to be followed by a trial court in its judicial review. 4-22-1-18 provides:

"On such judicial review such court shall not try or determine said cause de novo, but the facts shall be considered and determined exclusively upon the record filed with said court pursuant to this act (4-22-1-1 4-22-1-30).

"On such judicial review, if the agency has complied with the procedural requirements of this act, and its finding, decision or determination is supported by substantial, reliable and probative evidence, such agency's finding, decision or determination shall not be set aside or disturbed.

"If such court finds such finding, decision or determination of such agency is:

"(1) Arbitrary, capricious, an abuse of discretion or otherwise not in accordance with law; or

"(2) Contrary to constitutional right, power, privilege or immunity; or

"(3) In excess of statutory jurisdiction, authority or limitations, or short of statutory right; or

"(4) Without observance of procedure required by law; or

"(5) Unsupported by substantial evidence,

the court may order the decision or determination of the agency set aside. The court may remand the case to the agency for further proceedings and may compel agency action unlawfully withheld or unreasonably delayed.

"Said court in affirming or setting aside the decision or determination of the agency shall enter its written findings of facts, which may be informal but which shall encompass the relevant facts shown by the record, and enter of record its written decision and order or judgment. (Acts 1947, ch. 365, § 18, p. 1451.)"

The Act does not attempt to define the meaning of substantial evidence "a legal term which defies precise definition." State Department of Natural Resources v. Lehman (1978), Ind.App., 378 N.E.2d 31, See 4 K. Davis, Administrative Law Treatise § 29.01 (1958). To be upheld, an administrative determination must have a reasonably sound basis of evidentiary support. As Judge Robertson commented in State Department of Natural Resources v. Lehman, supra,

"This is not to suggest that Any evidence supportive of an agency's determination requires a reviewing court's affirmance; . .."

378 N.E.2d at 36.

We concluded in City of Evansville v. Southern Indiana Gas and Electric Company (1976), Ind.App., 339 N.E.2d 562, after a review of various authorities, that the substantial evidence standard authorizes a reviewing court to set aside a Commission's finding of fact when a review of the whole record clearly indicates that the agency's determination lacks a reasonably sound basis of evidentiary support.

The rationale necessitating a review of the whole record was summarized in City of Evansville as follows:

"Some additional clarification of our standard of review formula is necessary. It is well established that the substantial evidence test cannot be utilized to assay the 'reasonableness' of the conclusions of ultimate fact inferred by an agency from its findings of basic fact. See, e. g., NLRB v. Babcock & Wilcox Co. (1956), 351 U.S. 105, 112, 76 S.Ct. 679, 100 L.Ed. 975; NLRB v. Truitt Mfg. Co. (1956), 351 U.S. 149, 76 S.Ct. 753, 100 L.Ed. 1027. Ultimate facts may be described generally as factual conclusions derived from the basic facts; they are often expressed in terms of statutory criteria such as 'fair value' or 'used and useful.' Since findings of ultimate fact represent inferences drawn by the agency, they are not susceptible to scrutiny for evidentiary support in the record, but the reasonableness of the agency's inference is a question appropriate for judicial determination a 'question of law.'

"It is equally well settled that in determining the 'substantiality' of the evidence, the reviewing court must consider the evidence in opposition to the challenged finding of basic fact as well as the evidence which tends to support the finding. As Justice Frankfurter said: 'The substantiality of evidence must take into account whatever in the record fairly detracts from its weight.' Universal Camera Corp. v. NLRB (1951), 340 U.S. 474, 488, 71 S.Ct. 456, 464, 95 L.Ed. 456."

Id. at 572, 573. See Podgor v. Indiana University (1978), Ind.App., 381 N.E.2d 1274; L.S. Ayres & Company v. Indianapolis Power & Light Company (1976), Ind.App., 351 N.E.2d 814.

The trial court in the case at bar, after a review of the entire record, found a basic fact not included in the ICRC's finding of fact:

"4. Burton and Gerardot could have remained employed by Sutherland if they had not failed and refused to shave their moustaches."

II. Legislative Intent

The Indiana Civil Rights Law ³ (the Law) is codified at IC 1971, 22-9-1-1 to -12 (Burns Supp. 1978). The Law was amended in 1971 ⁴ to include "sex" as a criterion which would not be tolerated as a discriminatory bar to access of civil rights. The purpose of the Law and public policy of the State are enumerated in 22-9-1-2:

"(a) It is the public policy of the state of Indiana to provide all of its citizens equal opportunity for education, employment, access to public conveniences and accommodations and acquisition through purchase or rental of real property including but not limited to housing, and to eliminate segregation or separation based solely on race, religion, color, sex, national origin or ancestry, since such segregation is an impediment to equal opportunity. Equal education and employment opportunities and equal access to and use of public accommodations and equal opportunity for acquisition of real property are hereby declared to be civil rights.

"(b) The practice of denying these rights to properly qualified persons by reason of the race, religion, color, sex, national origin or ancestry of such person is contrary to the principles of freedom and equality of opportunity and is a burden to the objectives of the public policy of this state and shall be considered as discriminatory practices. The promotion of equal opportunity without regard to race, religion, color, sex, national origin or ancestry through reasonable methods is the purpose of IC 1971, 22-9-1. . . .

"(c) It is also the public policy of this state to protect employers, labor organizations, employment agencies, property owners, real estate brokers, builders and lending institutions from unfounded charges of discrimination.

"(d) It is hereby declared to be contrary to the public policy of the state of Indiana and an unlawful practice for any person, for profit, to induce or attempt to induce any person to sell or rent any dwelling by representations regarding the entry or prospective entry into the neighborhood of a person or persons of a particular race, religion, color, sex, national origin or ancestry.

"(e) IC 1971, 22-9-1 . . . shall be construed broadly to effectuate its purpose. . . ." (Citations omitted.).

The following terms are defined in 22-9-1-3:

"(1) The term 'discriminatory practice' shall mean the exclusion of a person, from equal opportunities because of race, religion, color, sex,...