Loras College v. Iowa Civil Rights Commission, 62323

• Decision Date: 14 November 1979
• Docket Number: No. 62323,62323
• Citation: 285 N.W.2d 143
• Parties: 21 Empl. Prac. Dec. P 30,478 LORAS COLLEGE, Appellee, v. IOWA CIVIL RIGHTS COMMISSION, Appellant.
• Court: Iowa Supreme Court

Page 143

285 N.W.2d 143

21 Empl. Prac. Dec. P 30,478

LORAS COLLEGE, Appellee, v. IOWA CIVIL RIGHTS COMMISSION, Appellant.

No. 62323.

Supreme Court of Iowa.

Nov. 14, 1979.

Thomas J. Miller, Atty. Gen., and Raymond D. Perry, Asst. Atty. Gen., for appellant.

Robert M. Bertsch and Michael J. Melloy, of O'Connor, Thomas, Hammer, Bertsch & Norby, Dubuque, for appellee.

Considered en banc.

McGIVERIN, Justice.

The controlling question here is whether an employer's retirement plan is subject to the Iowa Civil Rights Act, Chapter 601A, The Code 1973, in particular the age discrimination provisions of section 601A.7(1)(a), when a sixty-five-year old employee, who chose not to participate in the financial benefit portion of the plan, is terminated pursuant to the plan. ¹ The Iowa Civil Rights Commission found discrimination. On judicial review, the district court reversed the Commission. We affirm the district court.

Petitioner Loras College, the employer, is a private co-educational liberal arts institution located in Dubuque. It is funded, sponsored and partially sustained by the Roman Catholic Archdiocese of Dubuque. The college employs as faculty both priests and lay persons.

Respondent Iowa Civil Rights Commission is a state agency established under Chapter 601A, to, Inter alia, "receive, investigate, and pass upon the merits of complaints alleging unfair or discriminatory practices." § 601A.5(2), The Code 1973.

Upon the complaint properly filed with the Commission by Dr. Edward J. Schuster, the employee, the Commission found that Loras discriminated against him because of his age in ending his employment as a teacher.

I. Background and proceedings. Dr. Schuster, a layman, was born March 25, 1908. He joined the Loras faculty in 1956 as an associate professor of modern foreign languages. He later was awarded tenured status as a full professor, teaching Spanish and German. Under Loras' policy, tenure ends at age sixty-five. This allows for the hiring of younger teachers, for the constant and methodical regeneration of a qualified faculty, for the incorporation of new ideas and theories of education, and for maintaining the quality of education at Loras. See DeShon v. Bettendorf Community School District, 284 N.W.2d 329, 333 (Iowa 1979). Dr. Schuster became sixty-five during the 1972-73 academic year. He taught until May 13, 1973, when he was retired by Loras on the basis of his age.

Effective September 1, 1960, Loras had established a comprehensive retirement plan for lay persons, who were faculty members, administrative personnel and key supervisory maintenance employees. The plan included a document entitled "Retirement Plan" (hereinafter referred to as "benefit program"), in which the policy of retiring all benefit participants at the normal retirement age of sixty-five was set forth. Under the terms of the benefit program each participant in the program would contribute five percent of his basic salary through payroll deductions by Loras. The college would add equal amounts as its contribution and apply the combined sum to the purchase of retirement benefits for the employee. The benefit program was voluntary for such covered employees then serving and was compulsory for future employees in the covered categories.

As part of the retirement plan, Loras and its faculty established a policy that lay faculty members were to retire at the end of the academic year in which they attain the age of sixty-five. The policy was set forth in the document on Contractual Relations and Status of Faculty Members, as well as being an integral part of the document entitled "Retirement Plan" or benefit program. Dr. Schuster knew of the retirement policy and the benefit program Loras had established.

Although he clearly had the opportunity to participate in the benefit program of the retirement plan, Dr. Schuster chose not to participate. Therefore, the five percent employee contributions were not deducted from his salary from 1960 until his retirement in 1973.

The last signed contract between Loras and Dr. Schuster only provided employment for him for the 1972-73 academic year, in accordance with college policy and pursuant to the overall retirement plan.

The Commission found as a fact that the Loras benefit program as it was applied to its participants was not a subterfuge to evade the operation of the Iowa Civil Rights Act. § 601A.15, The Code 1973.

Loras suffered a significant decline in overall student enrollment commencing in 1971. The college also adopted a new curriculum, which went into effect in the fall of 1971, through which the graduation requirement of fourteen semester hours of foreign language was eliminated. These events led to a severe decline in the number of students taking language courses, with the resultant decrease in the need for faculty members teaching in the modern foreign language department.

A teacher in the foreign language department was expected to teach 270 student credit hours per year prior to 1972. In the fall of 1972 the number of teaching hours for each faculty member had fallen to seventy-five per year. Additionally, Loras had suffered significant financial losses during the five-year period from 1968 to 1972.

In 1972 and 1973 Loras found it necessary that the number of faculty be reduced in the department of modern foreign languages, and in 1973 the necessary reductions were determined to be mandatory.

The department was to be reduced from five to three teachers. The question as to who should be terminated had to be answered.

Recognizing the retirement policy of Loras, Dr. Schuster, on December 9, 1972, applied in writing to the Faculty Council for an extension of his service beyond the retirement age of sixty-five.

The Faculty Senate and Faculty Council at Loras studied the matter of faculty staffing and made general recommendations to the president of Loras. All faculty members in the department of modern foreign languages were considered before the president of Loras made his decision to apply the retirement plan's policy of retirement to Dr. Schuster and thereby denied his request for an extension of service. In addition to Dr. Schuster, another faculty member, Dr. Prendergast, was also retired in 1973 in accordance with the same retirement plan. No teaching faculty members have been added to the department since the retirement of Drs. Schuster and Prendergast.

After his termination, Dr. Schuster sought comparable teaching positions. He was unable to find such employment for the 1973-74 school year. He did obtain a position at Northern Arizona University (NAU) for 1974-75, but at a lower salary. He remained with NAU until the end of the 1976-77 academic year, at which time he refused a similar appointment for the next year.

On August 1, 1973, Dr. Schuster filed a complaint with the Civil Rights Commission, charging age discrimination against him by Loras. On April 13, 1978, after an evidentiary hearing before a hearing officer, the Commission found in favor of Dr. Schuster, ordered Loras to reinstate him and awarded certain monetary damages.

Loras petitioned for judicial review in district court under section 17A.19, The Code 1977. ² The court ruled, among other things, that section 601A.15, The Code 1973, exempted Loras from the provisions of the Iowa Civil Rights Act, and the discrimination complaint was dismissed. The Commission appealed under section 17A.20, The Code 1977.

Because we find section 601A.15, The Code 1973, dispositive of this appeal, we discuss only the effect of that statute under this record and do not consider the other issues raised by Loras and the Commission.

Unless otherwise stated, all later references will be to the 1973 Code, which was in effect when the alleged discrimination occurred.

In view of the manner in which the parties proceeded on judicial review, this was a contested case before the Commission within the meaning of section 17A.2(2), The Code 1977. Our review under section 17A.20 is not de novo. We "review the record in the manner specified in § 17A.19(7) and make anew the judicial determinations specified in § 17A.19(8)." Hoffman v. Iowa Department of Transportation, 257 N.W.2d 22, 25 (Iowa 1977); See Jackson County Public Hospital v. Public Employment Relations Board, 280 N.W. 426, 429 (Iowa 1979) (quoting Hoffman ). "Our review is limited, as the district court's review should have been, to the record made before the hearing officer." Davenport Community School District v. Iowa Civil Rights Commission, 277 N.W.2d 907, 909 (Iowa 1979); Hoffman, 257 N.W.2d at 25.

II. Exception of the Loras retirement plan from Chapter 601A.

A. Contentions of the parties. The Loras retirement plan was effective in 1960. The Iowa Civil Rights Act became effective in 1965. 1965 Iowa Acts, ch. 121. The Act was amended in 1972 to include coverage of age discrimination. 1972 Iowa Acts, ch. 1032.

Under the Iowa Civil Rights Act it is an unfair or discriminatory practice, in violation of section 601A.7(1)(a), for a person ³ to discharge any employee because of the age of such employee, unless such action is based on the nature of the occupation.

Section 601A.15 provides an exception to this general rule. "The provisions of this chapter relating to discrimination because of . . . age shall not be construed to apply to Any retirement plan or benefit system of any employer unless such plan or system is a mere subterfuge adopted for the purpose of evading the provisions of this chapter." § 601A.15 (emphasis added).

There is no question here as to whether Loras had a "retirement plan or benefit system" within the meaning of section 601A.15. Both parties agree that such a plan existed; however, they do not agree as to whether the college's policy of retirement at age sixty-five, as applicable to Dr. Schuster, was part of the plan. The parties also agree that the plan, as it applied to those individuals electing to participate in the benefits...