Rathjen v. Litchfield

• Decision Date: 31 July 1989
• Docket Number: No. 88-2364,88-2364
• Citation: 878 F.2d 836
• Parties: 51 Empl. Prac. Dec. P 39,209, 5 Indiv.Empl.Rts.Cas. 466 Diana RATHJEN, Plaintiff-Appellee Cross-Appellant, v. Barbara H. LITCHFIELD, and the City of Houston, Defendants-Appellants Cross-Appellees.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 836

878 F.2d 836

51 Empl. Prac. Dec. P 39,209, 5

Indiv.Empl.Rts.Cas. 466

Diana RATHJEN, Plaintiff-Appellee Cross-Appellant, v. Barbara H. LITCHFIELD, and the City of Houston Defendants-Appellants Cross-Appellees.

No. 88-2364.

United States Court of Appeals Fifth Circuit.

July 31, 1989.

Mark Thompson, John E. Fisher, John E. Fisher, Sr., Asst. City Attys., Clarence A. West, City Atty., Houston, Tex., for defendants-appellants cross-appellees.

David T. Lopez and David Lopez & Associates, Houston, Tex., for plaintiff-appellee cross-appellant.

Appeal from the United States District Court for the Southern District of Texas.

Before GARZA, JOLLY and JONES, Circuit Judges.

EDITH H. JONES, Circuit Judge:

Dr. Diana Rathjen, a specialist in industrial organizational psychology, was hired by the City of Houston in 1979 and shortly afterward promoted to Assistant Director of Personnel. In early 1983 she accepted a voluntary demotion to the post of Senior Personnel Administrator, and her working conditions continued to deteriorate after she filed this lawsuit protesting her demotion. Based on her claims of a procedural due process violation and retaliation for exercise of first amendment rights, a jury awarded her $5,000 actual damages and $25,000 punitive damages against Houston's Personnel Director Barbara Litchfield, who was responsible for the demotion and retaliation for which Rathjen filed suit. The court ordered equitable reinstatement of Rathjen to her former position. ¹ Raising numerous issues pertaining to the trial court's judgment in favor of Rathjen, the City of Houston appeals. We reverse.

I. BACKGROUND

We condense the lengthy series of events that underlie this action to those most pertinent for analysis. As Assistant Director of Personnel, Dr. Rathjen was in charge of research, career development, compensation and salary administration for the City of Houston. Her peer, defendant Joe Weikerth, was responsible for hiring, workers compensation and safety. Barbara Litchfield was employed by the City in October, 1982.

Rathjen and Litchfield immediately began discussing the EEOC and Title VII implications of using subjective interviews as opposed to testing to fill promotional opportunities with the City. These discussions led to unanticipated controversy during Rathjen's appearance before City Council on December 1, 1982, for the routine matter of requesting a room for the test for promotion within the city's Finance and Administration Department. Litchfield directed Dr. Rathjen not to discuss any policy matters or past practices and to talk with City Council only about reserving the room for this test. During the meeting, however, two black members of City Council protested the scheduling of the test and vigorously complained that the Finance and Administration Department had not provided equal employment opportunity in the past. Dr. Rathjen refused to answer questions on this subject, and the council members became even angrier.

As a result of this mishap, Dr. Rathjen was summoned to the mayor's office and reprimanded for her performance. One month later, Litchfield asked her to accept a voluntary demotion involving a 10% pay cut. Litchfield and the Mayor had approved this demotion during December. The position to which she was proposed to be demoted required only a bachelor's degree and one year work experience, compared to Dr. Rathjen's doctorate degree and eleven years of experience including service on the Rice University faculty.

Dr. Rathjen steadfastly refused to accept voluntary demotion, and at some point she was informed that steps were being taken toward involuntary demotion. She obtained able counsel, who requested negotiations with Litchfield. The jury found that an oral agreement was reached between the parties, whereby Rathjen accepted a form of voluntary demotion. Rather than suffer a 10% pay cut, her salary was reduced by a token amount, and she agreed to report to Joe Weikerth. She contends that Litchfield also agreed to continue making available to her a city automobile, a secretary, and a staff assistant with the title "Personnel Specialist," and that she would remove a letter from Rathjen's personnel file alleging poor performance.

The jury found, however, that Rathjen's concessions to Litchfield were unsuccessful. Resolving hotly contested evidentiary disputes, the jury found that Litchfield did not intend to keep her promises and that the promises were made in order to induce Rathjen to give up her rights to a fair hearing. The voluntary demotion and accompanying terms of agreement became effective as of February 17, 1983. Nevertheless, Rathjen testified that Litchfield never complied with the non-monetary aspects of their agreement, and that she became aware of the breach within only six months after the "settlement."

Moreover, Rathjen's ability to function successfully within her department continued to be hampered. Prior to Litchfield's arrival as City Personnel Director, Rathjen had received consistently favorable employment evaluations. After her voluntary demotion, however, Rathjen's evaluations deteriorated based on complaints of communication difficulties, low productivity, lack of imagination and similar matters. On at least two occasions, Rathjen employed city civil service procedures which permitted formal grievance over these evaluations.

Houston's municipal financial woes eventually required a layoff of Rathjen, which was averted only when the district court, after the jury ruled in her favor, ordered equitable reinstatement to her earlier position as Assistant Personnel Director.

II. DUE PROCESS VIOLATION

As has been noted, the jury found that Litchfield made promises to Dr. Rathjen with the intent to breach them, in order to induce her to forego a fair hearing over her demotion. On the strength of this finding, the trial court entered judgment for Dr. Rathjen and denied the city's motion for judgment n.o.v., holding that these actions deliberately and fraudulently breached her right to procedural due process. Although the parties dispute the sufficiency of evidence to sustain the jury verdict, the fundamental question is whether, assuming the validity of the finding, it sustains a procedural due process claim.

A few verities preface our analysis. Dr. Rathjen, a tenured city employee, had a constitutionally protected property interest in her position as Assistant Personnel Director. Board of Regents of State Colleges v. Roth, 408 U.S. 564, 92 S.Ct. 2701, 2709, 33 L.Ed.2d 548 (1972). The Fourteenth Amendment's due process clause has been held to require "some kind of hearing" before she could be deprived of that interest by termination or demotion. Cleveland Board of Education v. Loudermill, 470 U.S. 532, 545, 105 S.Ct. 1487, 1495, 84 L.Ed.2d 494 (1985). Our court has additionally stated that a due process violation exists where an employee is constructively discharged by actions of the employer intended to force the employee to sacrifice his due process protection by voluntarily resigning. Fowler v. Carrollton Public Library, 799 F.2d 976 (5th Cir.1986); Findeisen v. Northeast Independent School Dist., 749 F.2d 234 (5th Cir.1984), cert. denied 471 U.S. 1125, 105 S.Ct. 2657, 86 L.Ed.2d 274 (1985); Bueno v. City of Donna, 714 F.2d 484 (5th Cir.1983).

According to Rathjen, this case follows directly in the path of the constructive discharge due process cases. Litchfield had no authority to demote her without a hearing. By entering into a settlement agreement with Litchfield, Dr. Rathjen says she agreed to forebear pursuing a grievance hearing through the City Civil Service Commission. ² This agreement was, however, fraudulently induced by Litchfield. Dr. Rathjen characterizes the City's defense as implying that even though it could not demote her without a fair hearing it could do so if Dr. Rathjen failed to ask for the hearing because of fraudulent representations.

Several subtle flaws burden this argument, even acknowledging, as we must, the soundness of the pertinent jury finding. Dr. Rathjen testified several times that she was fully aware of the City's employee grievance procedures and that these allowed her to contest virtually any "injustice." She believed as early as July 1983, that Litchfield was not living up to their agreement. She was aware that she had the right to file a grievance over this breach of faith and potentially to obtain full reinstatement from the City Civil Service Commission. Neither then nor later, however, did she ever pursue a grievance concerning the settlement agreement. ³ Instead, she filed this lawsuit in December 1984.

The availability of a grievance and hearing procedure which would have enabled Dr. Rathjen to contest the circumstances of her voluntary demotion or her unsuccessful settlement agreement renders this a different case from our constructive discharge cases. Those cases rested on the premise that once an employee has voluntarily resigned, no procedural remedy is available from his former employer. Indeed, in Fowler, 799 F.2d at 979, and Findeisen, 749 F.2d at 236, the employees sought but did not obtain post-termination hearings. Those employees, by voluntarily resigning, lost any due process protections they would otherwise have had, but Dr. Rathjen never made such a sacrifice.

Technically, Dr. Rathjen's right to insist upon a hearing before demotion was thwarted when her voluntary demotion was procured by fraud. This is a judgment rendered purely in hindsight, however, for if Litchfield had carried through with her promises, the settlement would have been satisfactory to Dr. Rathjen. We should be reluctant to discourage compromise of public employer-employee disputes by suggesting that whenever such a dispute is resolved informally in order to forestall formal hearing procedures, the failure of this process to satisfy the employee automatically threatens a procedural due process violation. Rat...