Lawley v. Department of Higher Educ.

• Citation: 36 P.3d 1239
• Decision Date: 03 December 2001
• Docket Number: No. 00SC473.,00SC473.
• Parties: Kathryn L. LAWLEY and Colorado State Personnel Board, Petitioners, v. DEPARTMENT OF HIGHER EDUCATION and Board of Trustees of the University of Northern Colorado, University of Northern Colorado, Respondents.
• Court: Supreme Court of Colorado

36 P.3d 1239

Kathryn L. LAWLEY and Colorado State Personnel Board, Petitioners, v. DEPARTMENT OF HIGHER EDUCATION and Board of Trustees of the University of Northern Colorado, University of Northern Colorado, Respondents.

No. 00SC473.

Supreme Court of Colorado, En Banc.

December 3, 2001.

Nora V. Kelly, P.C., Denver, CO, Attorney for Petitioner Kathryn L. Lawley.

Ken Salazar, Attorney General, Denise DeForest, Assistant Attorney General, Business and Licensing, Denver, CO, Attorneys for Petitioner Colorado State Personnel Board.

Ken Salazar, Attorney General, Susan J. Trout, Assistant Attorney General, Regulatory Law Employment Section, Denver, CO, Attorneys for Respondents.

Justice RICE delivered the Opinion of the Court.

We granted certiorari to review an unpublished opinion of the Colorado Court of Appeals that reversed a decision of the Colorado State Personnel Board (Board) directing that Kathryn Lawley be reinstated as the Director of Parking Services of the University of Northern Colorado (University). The Personnel Board's decision adopted the findings of fact made by an Administrative Law Judge (ALJ) in an evidentiary hearing resulting from Lawley's appeal to the Personnel Board¹; however, it rejected the ALJ's conclusions of law.² The ALJ concluded: (1) that the action abolishing Lawley's position was not arbitrary, capricious, or contrary to rule or law; and (2) that the University did not discriminate on the basis of gender. The Board reversed the ALJ's conclusions of law and ruled that the University's action in abolishing Lawley's position was arbitrary and capricious and constituted gender discrimination.

We must first resolve whether the Board was bound by the ALJ's ultimate conclusion that the University's actions were not arbitrary, capricious, or contrary to rule or law and its conclusion that the University did not discriminate against Lawley. Next, we must decide whether the court of appeals erred when, considering the Board's decision, it concluded, "Reasonable persons fairly and honestly considering the findings and evidence must reach a contrary conclusion." Lawley v. Dep't of Higher Educ., No. 98CA1912, slip op. at 11 (Colo.App. Apr. 6, 2000). We find that both of the Board's conclusions — that the University discriminated against Lawley and that its action was arbitrary and capricious — are ultimate conclusions of fact. Therefore, the Board was entitled to substitute its own judgment for the ALJ's decision regarding both conclusions. In light of our recent decision in Bodaghi v. Department of Natural Resources, 995 P.2d 288 (Colo.2000), we also conclude that the court of appeals erred when it ruled, after considering only a portion of the evidence from the record, that "[t]hese facts, without more . . . do not support a conclusion that the action was a pretext for discrimination." Lawley, No. 98CA1912, slip op. at 10. We hold that the record contains sufficient evidence to support the Personnel Board's ultimate conclusion of fact that the University was motivated by gender when it abolished Lawley's position. We also hold that the Board's ruling that the University acted arbitrarily and capriciously is warranted by the record. Accordingly, we reverse the court of appeals and reinstate the order of the Board.

FACTS

Lawley served as Director of Parking Services at the University of Northern Colorado from June 1988 until June 1997, when the position was abolished.³ At the time the University abolished the position, Lawley's salary was $67,680. Although administratively located within the University's Police Department, the parking services unit is self-funded through sources of revenue such as the sale of decals, meter fees, and parking space fees. During Lawley's tenure, Parking Services generated about $750,000 of revenue and operated with a budget surplus. Lawley's salary was paid out of an auxiliary fund generated from parking revenues.

In fiscal year 1996-97, the University experienced a decline in enrollment for the third consecutive academic year. Because of the TABOR (The Taxpayer's Bill of Rights) amendment,⁴ which was passed in 1992, the drop in student enrollment affected the amount of funding the University received from the state legislature. The University's president concluded that the University would be required to reduce spending authority for $159,607 in salaries in order to balance the budget for 1997-98. The University determined that the following objectives should be taken into account in implementing any cost-saving plan: (1) existing employees should be retained; (2) employee salaries should remain commensurate with what they were prior to the restructuring; and (3) essential services of the University should not be affected.

The Division of Finance and Administration (Division), which includes the parking unit, was asked to reduce statefunded salaries by $40,000. In order to meet the required cost reductions, the University abolished the Parking Director position, reassigned Lawley's duties to the Police Chief, and created a new position to assist the Police Chief with administering parking operations.⁵ Assigning parking services duties to the Chief of Campus Police allowed the University to pay approximately $40,000 of the Chief's salary out of parking revenues, rather than entirely from state-appropriated funds as before. The new position was classified as an Administrative Program Specialist with a salary of $39,600 and was filled by Mike Rose, whose previous position with a comparable salary had been eliminated. The elimination of Rose's previous post had put Rose in a position where he could, under University rules, take the job of another University employee, Darrell Johnson. Therefore, by creating a new position for Rose the University prevented Johnson from being forced out of his job. Chief of Campus Police Terence Urista testified that Assistant to the Vice-President of Administration Robert Hetzel told him that preventing Johnson from being bumped out of his job was one of the reasons that the new position had been created.

In making its decision, Hetzel, who participated in developing the budget for the Division of Finance and Administration and the Division of Auxiliary Services, testified that one of the factors management considered was the previous history of internal redistributions within the Division. Police services had not been affected by redistributions in the prior three years. In addition, the Division found that Lawley's salary exceeded that of individuals in comparable positions at similar institutions. It also found that the University paid Lawley the same salary as the Parking Services Director at Colorado State University, an institution with an enrollment twice that of the University. However, the Division did not conduct a formal salary survey. Moreover, Hetzel did not include the informal salary information in a memorandum, which explained the restructuring, to Dennis Hayzlett, the Director of Personnel Services, even though Hetzel testified that the salary comparison was a crucial part of his analysis. Testimony from the Dean of Students, Jean Schober Morrell, and Chief Urista indicates that Hetzel expressed repeated concern about Lawley's salary. Furthermore, the University had conducted a job audit on Lawley's position in 1995 to review her level of responsibility and job functions and set her salary accordingly. No formal job audit was conducted pursuant to the plan to abolish her position.

Two days prior to the effective date of the restructuring, Chief Urista,⁶ who had not been consulted about abolishing Lawley's position, offered an alternative restructuring proposal. Chief Urista proposed that most of the budgetary savings could be made without abolishing Lawley's position. The University did not change its plans after receiving the Police Chief's alternative proposal.

Moreover, Chief Urista testified that a memo regarding the abolition of the Director of Parking Services position sent from Hetzel to Vice President of Administration Steven Garcia misrepresented his position. The memo stated, and Hetzel testified, that Chief Urista recommended that the University create a new Police Officer III position in response to the "reorganization of Parking Services." Chief Urista testified that he recommended an Administrator I level position.

As a result of the University's actions, Lawley exercised her retention rights under the State Personnel Board rules and was moved into a position as a Police Officer III in the University Police Department. This was a demotion for Lawley as the new position was classified at a lower pay grade. Lawley filed a grievance and in response was promoted to Lieutenant with a salary of $60,060 and a less desirable swing shift schedule than her work schedule as Director.

Lawley appealed the University's actions to the Board, alleging unlawful discrimination and arbitrary and capricious action. The ALJ issued an initial decision, denying relief on both grounds and concluding that the University did not discriminate against Lawley and did not act arbitrarily, capriciously, or contrary to law. The Board reviewed the ALJ's initial decision and reversed it, finding both discrimination by the University and arbitrary and capricious action. On appeal, the court of appeals reversed the Board's decision, reasoning that "[r]easonable persons fairly and honestly considering the findings and evidence must reach a contrary conclusion." Lawley, No. 98CA1912, slip op. at 11.

ANALYSIS

This case presents a fairly narrow issue.⁷ First, we must determine whether the Board was entitled to substitute its own conclusions for those of the ALJ. Next, we must analyze whether the court of appeals erred when it decided that the Board abused its discretion in concluding: (1) that the University discriminated against Lawley based on her gender; and (2) that the University's decision to abolish Lawley's...