Indiana Dept. of Environmental Mgt. v. West

• Decision Date: 06 December 2005
• Docket Number: No. 49S02-0501-CV-22.,49S02-0501-CV-22.
• Citation: 838 N.E.2d 408
• Parties: IND. DEP'T. OF ENVTL. MGMT., Appellant (Petitioner below), v. Lynn C. WEST, et al., Appellees (Respondents below).
• Court: Indiana Supreme Court

838 N.E.2d 408

IND. DEP'T. OF ENVTL. MGMT., Appellant (Petitioner below), v. Lynn C. WEST, et al., Appellees (Respondents below).

No. 49S02-0501-CV-22.

Supreme Court of Indiana.

December 6, 2005.

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Steve Carter, Attorney General of Indiana, Frances Barrow, Deputy Attorney General, Indianapolis, for Appellant.

Melinda O'Dell, Mooresville, for Appellees.

On Petition to Transfer from the Indiana Court of Appeals, No. 49A02-0309-CV-752.

SULLIVAN, Justice.

The State Employees' Appeals Commission ("SEAC") ordered the Indiana Department of Environmental Management ("IDEM") to create new positions for three employees who contend they suffered age discrimination in the course of a reorganization of IDEM. Based on our review of the record, we hold that the employees did not make out a prima facie case of age discrimination because they did not show that they had been replaced by significantly younger persons. We also hold that SEAC has no authority to order the Department to create new positions as a remedy.

Background

In 1998, Lynn C. West, Michael J. Dalton, and Phillip E. Wuensch ("Employees") were all employees of IDEM when IDEM announced that it would be consolidating its Office of Solid and Hazardous Waste Management and Office of Environmental Response into a single department called the Office of Land Quality. As part of its restructuring, IDEM reclassified the positions of many of its workers, including those of Employees.

As a result of the restructuring, Employees, at the time all above the age of 40, received new job assignments that did not decrease their pay but did reduce their managerial responsibilities. Specifically:

• Before the restructuring, West held the position of Environmental Manager Supervisor 4. After the department consolidation, she was offered and accepted a position as Senior Environmental Manager 1. West's new position required her to do "staff work" instead of "management work." Additionally, she moved from a larger section chief cubicle to a smaller staff cubicle.

• Before the restructuring, Dalton held the position of Environmental Branch Chief E-7. After the department consolidation, Dalton accepted a position as Senior Environmental Manager Supervisor 3. In Dalton's new position he was no longer responsible for supervising and evaluating section chiefs but instead supervised staff members. Dalton's workspace moved from a private office to a section chief cubicle.

• Before the restructuring, Wuensch held the position of Environmental Manager Supervisor 4, a position where he supervised a group of people. After the department consolidation, he was offered and accepted a position as Senior Environmental Manager 1. This change resulted in Wuensch being placed in a position equal to individuals he had previously supervised. Wuensch's workspace was also moved from that of a large section chief cubicle to a smaller staff cubicle.

See Ind. Dep't. of Envtl. Mgmt. v. West, 812 N.E.2d 1099, 1102-03 (Ind.Ct.App.2004).

The Legislature has adopted a statute, the State Personnel Act, Indiana Code Section 4-15-2-1 et seq., that inter alia, provides state employees with a mechanism to challenge involuntary changes in employment status and unsatisfactory conditions of employment, including actions alleged to have been taken against employees on the basis age. Ind.Code § 4-15-2-35 (2004).

Acting pursuant to the State Personnel Act, Employees filed complaints with the State Personnel Department¹ alleging that IDEM had created unacceptable working conditions when it reclassified their jobs and had illegally discriminated against them on the basis of their age. Rachel Scudder, Director of Human Resources Management for IDEM, denied these allegations concluding that the position changes were lateral transfers, not demotions. Employees' age discrimination allegations were then forwarded to Bruce Baxter, the Director of Grievance Administration, who investigated these allegations and found them unsubstantiated. Baxter also concluded the Employees' position changes were lateral transfers and not demotions.

As permitted by the State Personnel Act, Employees then appealed to SEAC.² Employees introduced the following evidence in support of their age discrimination allegations at the hearing before SEAC. They presented the testimony of Robert Moran, an IDEM employee over the age of 40. He testified that on February 4, 1998, he had a discussion with Mary Beth Tuohy, an assistant commissioner, who encouraged Moran and other "senior supervisors to take technical positions and — to facilitate a reorganization." Tr. at 139. This, according to Tuohy, "would set a good example for other supervisors." Id. Coupled with Tuohy's advice was the implication, according to Moran, that if he did not comply she would use the appraisal system to demote him. Tuohy then stated privately to him that she wanted to bring in "some new blood with fresh ideas. . . ." Id. at 140.

Moran also noted that prior to the restructuring, several people under the age of 40 were promoted to supervisory positions by Tuohy. As far as Moran could tell, "the only common element. . . [was that those promoted] were much younger than the branch chiefs." Id. at 159.

Employees also presented statistical data compiled by IDEM, which indicated that after the merger most of the reclassifications had been borne by employees above the age of 40. IDEM employee Rachel Scudder noted that after becoming aware of this data she felt "it [was] a cause for concern." Id. at 305. The statistical evidence indicated that before the merger, 34 of the 39 managers (87%) were over 40. After the merger, however, only 21 of the 26 remaining managerial positions (81%) were held by employees over 40.

After its fact-finding hearing, Chief Hearing Officer Jack Riggs ("Hearing Officer") found on the basis of this evidence that Employees had proven by a preponderance of the evidence that age bias was a significant factor in their job reclassifications. The Hearing Officer ordered that Employees "be granted good faith consideration and interviews for any vacant effected position and for any future vacancies in effected positions." Appellees' App. at 35.

Both IDEM and Employees submitted objections to the Hearing Officer's Report and Order. SEAC held a hearing after requesting both sides to submit briefs. It then held a regular meeting after which it ordered the Hearing Officer to make changes to his report and order. SEAC issued its final order on May 9, 2001, essentially adopting the Hearing Officer's Revised Report and Order but ordering that Employees be placed back in the supervisory positions they held before the department consolidation. Concluding its order, SEAC held that:

The lack of vacant positions shall not be deemed any sort of excuse for failure to immediately implement this Order. The Commission finds that since this matter arises solely due to the unlawful discrimination by [IDEM], that [IDEM] must deal with any double-slotting, layoffs or budgetary impacts from its own resources. Due to Findings of bad faith and considering that [Employees] would have already held these positions for almost two years in the absence of discrimination, the Commission further orders that the probationary period be waived and that [Employees] be immediately granted permanent status in their newly ordered positions.

Id. at 82. In short, SEAC ordered IDEM to create new positions for Employees that did not previously exist.

IDEM filed a petition for judicial review, which the trial court denied before issuing an amended order adopting SEAC's May 9, 2001, order in its entirety. The Court of Appeals affirmed the trial court's decision. West, 812 N.E.2d at 1118. IDEM sought, and we granted, transfer to this Court. Ind. Dep't of Envtl. Mgmt. v. West, 831 N.E.2d 734 (Ind.2005) (mem.). We reverse.

Discussion

This case presents two issues for our determination: (1) whether SEAC was correct in its determination that IDEM improperly took action against the Employees on the basis of their age; and (2) whether SEAC had the legal authority to order IDEM to create new positions for the Employees.

I

IDEM contends that SEAC was incorrect to find that it was guilty of age discrimination under Indiana's State Personnel Act. In particular, IDEM contends that the effect of the opinion of the Court of Appeals is to place the burden of proof solely on the State to demonstrate it did not discriminate on the basis of age.³ Neither the decision of the Court of Appeals nor the State Personnel Act itself articulate a particular evidentiary methodology to use in such cases.

A

The State Personnel Act provides state employees with recourse and remedies to protect them from adverse employment action taken against them "on the basis of politics, religion, sex, age, race or because of membership in an employee organization. . . ." Ind.Code § 4-15-2-35 (2004). Similarly, Title VII of the federal Civil Rights Act of 1964, provides protection against "discrimination in employment because of race, color, religion, sex, . . . [and] age. . . ." Exec. Order No. 11478 (1969), reprinted in 42 U.S.C. § 2000e (2003). While we recognize that this is not a federal Title VII action and federal law is not controlling, we do find the federal approach to Title VII discrimination actions instructive in this matter on the basis of Title VII's similarity to Indiana's State Personnel Act.

The United States Supreme Court in McDonnell Douglas Corp. v. Green, 411 U.S. 792, 93 S.Ct. 1817, 36 L.Ed.2d 668 (1973), provided an analytical framework that allocates each party's burden of persuasion in employment discrimination actions brought under Title VII. In an effort to "clarify the standards governing the disposition of an action challenging employment discrimination, . . ." the Court announced that an employee in an employment discrimination action "must carry the initial burden under the...