EMPLOYMENT SECURITY COMMISSION OF NORTH CAROLINA, APPELLANT/RESPONDENT v. WILLIAM PEACE, APPELLEE/PETITIONER; EMPLOYMENT SECURITY COMMISSION OF NORTH CAROLINA, APPELLEE/RESPONDENT v. WILLIAM H. PEACE, III, APPELLANT/PETITIONER
No. COA95-678; No. COA94-1283
COURT OF APPEALS OF NORTH CAROLINA AT RALEIGH
December 2, 1997
128 N.C. App. 1 (1997)
SMITH, Judge; LEWIS, Judge, concurs; GREENE, Judge, dissenting in part.
1. Administrative Law and Procedure § 9 (NCI4th); Labor and Employment § 120 (NCI4th)— Title VII retaliatory discharge claim—jurisdiction of OAH
The Office of Administrative Hearings (OAH) had jurisdiction to hear an ESC employee‘s claim for retaliatory discharge in violation of Title VII of the Civil Rights Act of 1964 and did not act ultra vires in adjudicating such claim. The OAH does not function as a court in violation of
2. Labor and Employment § 121 (NCI4th)— Title VII claim—burden of proof
Plaintiff carries the initial burden of proof in Title VII retaliatory discharge cases. In order to make a prima facie showing
3. Labor and Employment § 121 (NCI4th)— Title VII action—burden of proof
The Office of Administrative Hearings erred in placing the initial burden on defendant employer to show an absence of retaliatory purpose in a Title VII retaliatory discharge case prior to plaintiff employee‘s prima facie showing of a retaliatory discharge.
4. Public Officers and Employees § 66 (NCI4th)— state employee—continued employment—property interest—due process
A state employee had a property interest in continued employment created by
5. Public Officers and Employees § 66 (NCI4th)— state employee—dismissal for just cause—burden of proof
The employer had the initial burden to produce evidence that a state employee was dismissed for “just cause,” and the employee must then come forward with evidence that his or her dismissal was without “just cause.”
6. Public Officers and Employees § 66 (NCI4th)— state employee—dismissal for just cause—burden on employee—due process
Placing the burden of proof on the state employee in determining whether the employee was dismissed for “just cause” within the purview of
Judge GREENE dissenting in part.
Attorney General Michael F. Easley, by Chief Deputy Attorney General Andrew A. Vanore, Jr., and Assistant Attorney General Valerie Bateman, for North Carolina Department of Justice; and Chief Counsel T.S. Whitaker and Attorney Fred R. Gamin, for North Carolina Employment Security Commission, respondent appellant (No. COA94-1283), respondent appellee (No. COA95-678).
Hilliard & Jones, by Thomas Hilliard, III, for petitioner appellant (No. COA95-678).
William H. Peace, III, petitioner appellee (No. COA94-1283), pro se.
SMITH, Judge.
On 15 October 1985, William H. Peace, III (“Peace“), began his employment with respondent Employment Security Commission (“ESC“) as its Equal Employment Opportunity (“EEO“) officer. On 10 April 1991, an incident between Peace and a coworker ultimately led to Peace‘s dismissal for alleged unacceptable personal conduct. The State Personnel Commission (“SPC“) adopted, inter alia, the following facts as recommended by the Administrative Law Judge (“ALJ“): During his 1985 orientation, Peace was informed that by paying $2.00
On 10 April 1991, Peace got a cup of coffee from the personnel file room. As Peace was leaving the office with the coffee, an exchange took place with Ms. Catherine High, a supervisor in the personnel office, in which she told him that he should pay her for the coffee. Peace refused. Ms. High called Peace “despicable” and told him she hoped he was fired. She told Peace that if he got another cup of coffee and did not pay her, she would get a cup of coffee and scald him with it. Ms. High informed her supervisor and Mr. Gene Baker, who became Peace‘s immediate supervisor as of 22 April 1991, of the incident.
On the afternoon of 10 April 1991, Peace contacted the magistrate‘s office regarding the incident with Ms. High. Peace was informed that, if he believed Ms. High was capable of carrying out her threat, he should take out a warrant against her. Peace spoke with Ms. High following his conversation with the magistrate‘s office, at which time he gave her an opportunity to apologize. Ms. High did not apologize. Thereafter, Peace had the magistrate‘s office issue summons against Ms. High charging her with communicating a threat. The charge was dismissed by the trial court as frivolous and Peace was ordered to pay court costs.
Peace was not contacted by his superiors regarding the incident until he received a predismissal conference memorandum on 5 June 1991, from Gene Baker, his immediate supervisor. Following a 6 June dismissal conference, Peace was discharged for unacceptable personal conduct. In a 7 June letter, Ann Q. Duncan, Chairperson of ESC, explained that Peace was being dismissed for unacceptable conduct, including taking the coffee without paying Catherine High and filing criminal charges against High, which were found to be frivolous. Such conduct, said Duncan, caused Peace‘s reputation as the EEO
Peace filed two appeals of the ESC decision to discharge him. The bases of his appeals were that ESC lacked “just cause” to dismiss him pursuant to
Through its investigation, the Office of Administrative Hearings (“OAH“) found reasonable cause to believe that a violation of Title VII had occurred. OAH presented Peace with three options. He could: (1) receive a right to sue letter; (2) commence a contested case hearing in OAH; or (3) do nothing. Peace chose to commence a contested case hearing with regard to the retaliatory discharge claim. He also filed a petition for contested case hearing pursuant to
Pursuant to
The proper standard of review for the superior court ” ‘depends upon the particular issues presented on appeal.’ ” Act-Up Triangle v. Commission for Health Services of the State of North Carolina, 345 N.C. 699, 706, 483 S.E.2d 388, 392 (1997) (citation omitted). If petitioner asks: ” ‘(1) whether the agency‘s decision was supported by the evidence or (2) whether the decision was arbitrary or capricious, then the reviewing court must apply the “whole record” test.’ ” Id. (quoting In re Appeal by McCrary, 112 N.C. App. 161, 165, 435 S.E.2d 359, 363 (1993)). Under the whole record test, a reviewing court is required to examine all competent evidence in order to determine whether the agency decision is supported by substantial evidence. Id. The definition of substantial evidence includes ” ‘such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.’ ” Id. at 707, 483 S.E.2d at 393 (citation omitted). Furthermore, in making arbitrary or capricious determinations concerning the agency decision, the reviewing court ” ‘does not have authority to override decisions within agency discretion when that discretion is exercised in good faith and in accordance with law.’ ” Id. at 707, 483 S.E.2d at 393 (citation omitted).
Appellate review of a superior court order concerning an agency decision requires an examination of the trial court‘s order for any errors of law. Id. at 706, 483 S.E.2d at 392. The two tasks involved include: ” ‘(1) determining whether the trial court exercised the appropriate scope of review and, if appropriate, (2) deciding whether the court did so properly.’ ” Id. (citation omitted). The whole record test allows a reviewing court to determine whether an administrative decision has a rational basis in the evidence. Id. at 706-07, 483 S.E.2d at 392.
At the outset, we note that the actions of both Peace and High were inappropriate and childlike. As a result of both parties’ improper behavior and subsequent refusals to resolve their differences amicably as adults, this matter has involved years of litigation and, as yet, remains unresolved. If there was ever a case that could have been resolved by the parties and participants in an employment controversy and was not, then this must be that case.
I. Title VII Retaliatory Discharge Claim
A. The Jurisdiction of OAH in Title VII Cases
[1] As a preliminary matter, we address ESC‘s argument that the trial court erred in failing to find OAH did not have jurisdiction to hear Peace‘s Title VII retaliatory discharge claim, and also in failing to find OAH acted ultra vires by adjudicating such claim. ESC contends that only courts, and not administrative agencies, have jurisdiction to hear Title VII cases, and if OAH is authorized to hear Title VII claims, then it is functioning as a court in violation of
The judicial power of the State shall, except as provided in Section 3 of this Article, be vested in a Court for the Trial of Impeachments and in a General Court of Justice. The General Assembly shall have no power to deprive the judicial department of any power or jurisdiction that rightfully pertains to it as a co-ordinate department of the government, nor shall it establish or authorize any courts other than as permitted by this Article.
Title VII authorizes the Equal Employment Opportunity Commission (“EEOC“) to enter into worksharing agreements with state and local agencies charged with the administration of state fair employment practices laws in order to fulfill its duty of preventing unlawful employment practices.
To support its argument that only courts, and not administrative agencies, have the authority to hear Title VII claims, ESC cites footnote four in Yellow Freight System, Inc. v. Donnelly, 494 U.S. 820, 108 L. Ed. 2d 834 (1990). This footnote points out that Congress opted for judicial, rather than administrative enforcement of Title VII claims. Id. at 825, 108 L. Ed. 2d 840 n.4. However, this footnote precisely states Congress “preferred that the ultimate determination of discrimination rest with the Federal judiciary,” and not EEOC. Id. The Court does not attempt to say that state administrative agencies have no authority to hear Title VII claims. In fact, the Court, when discussing the 60-day delay found in
A. Burden of Proof in Title VII Cases
[2] According to the North Carolina Supreme Court, the claimant carries the initial burden of proof in Title VII cases. See North Carolina Department of Correction v. Gibson, 308 N.C. 131, 137, 301 S.E.2d 78, 87 (1983). In addition, a prima facie showing of retaliatory discharge requires a plaintiff to show: (1) he engaged in some protected activity, such as filing an EEO complaint; (2) the employer took adverse employment action against plaintiff; and (3) that the protected conduct was a substantial or motivating factor in the adverse action (a causal connection existed between the protected activity and the adverse action). See Kennedy v. Guilford Technical Community College, 115 N.C. App. 581, 584, 448 S.E.2d 280, 282 (1994) (adopting the federal rules on prima facie showing in a state retaliatory discharge claim) (plaintiff claimed she was retaliated against for filing race and sex discrimination charges with the EEOC). Petitioner must prove “but for” causation instead of “motivating factor” in his prima facie case of retaliatory acts in violation of Title VII. Id.
After plaintiff presents a prima facie case of retaliation, ” ‘the burden shifts to the defendant to show it would have taken the same action even in the absence of protected conduct’ “. Id. (quoting
If defendant shows a legitimate reason that overcomes the presumption, plaintiff then has to show that the reason was only a pretext for the retaliatory action. Id. Therefore, ” ‘a plaintiff retains the ultimate burden of proving that the [adverse employment action] would not have occurred had there been no protected activity’ engaged in by the plaintiff.” Id. (quoting Melchi v. Burns Int‘l Sec. Servs. Inc., 597 F.Supp. 575, 583 (E.D. Mich. 1984)).
[3] In the instant case, plaintiff Peace claims the true reason he was discharged is because he filed discrimination claims against the EEOC in 1989, a protected activity, instead of the proffered reasons surrounding the coffee incident in 1991. However, the ALJ erred by placing the initial burden of proof on the defendant employer to show an absence of retaliatory purpose prior to Peace‘s prima facie showing of retaliatory discharge. Since the trial court affirmed the ALJ who had improperly placed the burden of proof on ESC, this retaliatory discharge claim must be reversed and remanded to the lower court for further remand to OAH for proceedings not inconsistent with this opinion.
II. “Just Cause” Claim
With respect to his “just cause” claim, Peace contends the trial court erred in determining that SPC‘s decision and order improperly placed the burden of proof on ESC. He argues that because ESC is in a better position to “ferret out the reasoning behind his termination” than he is, ESC should have the burden of proof.
[4]
[F]irst, the private interest that will be affected by the official action; second, the risk of an erroneous deprivation of such interest through the procedures used, and the probable value, if any, of additional or substitute procedural safeguards; and finally, the Government‘s interest, including the function involved and the fiscal and administrative burdens that the additional or substitute procedural requirement would entail.
We acknowledge that the private interest affected, the first factor to be considered under the Mathews test, is of the utmost importance. Courts “have frequently recognized the severity of depriving a person of the means of livelihood.” Cleveland Board of Education v. Loudermill, 470 U.S. 532, 543, 84 L. Ed. 2d 494, 504 (1985). We also acknowledge the State‘s substantial interest in maintaining employee discipline and efficiency.
[T]he Government‘s interest, and hence the public‘s interest, is the maintenance of employee efficiency and discipline. Such factors are essential if the Government is to perform its responsibilities effectively and economically. To this end, the Government, as an employer, must have wide discretion and control over the management of its personnel and internal affairs.
Arnett v. Kennedy, 416 U.S. 134, 168, 40 L. Ed. 2d 15, 41 (1974). The central issue in the present case concerns the second Mathews factor: whether placing the burden of proof on an employee to show he was terminated without “just cause” creates a substantial risk of erroneous termination.
We first note the absence of a statute or other authority allocating the burden of proof in “just cause” claims. Though we attempt to place such burden in a manner that will obviate the risk of erroneous termination, we believe the burden of proof would have been more properly allocated by our General Assembly, or even possibly by SPC pursuant to the rule-making authority found in
[5] When statutes fail to dictate with whom the burden of persuasion lies, the burden is judicially allocated based on “considerations of policy, fairness and common sense . . . .” Id. at § 37. For cases in which the burden of proof remains unallocated, it has been suggested that the burden be placed “upon the party who has peculiar knowledge of the facts and who, therefore, is better able to produce proof.” Id. In the instant case, the party having particular knowledge as to the cause of Peace‘s dismissal is ESC. An employee allegedly dismissed for “just cause” would be faced with an almost insurmountable task in attempting to prove he or she was dismissed for something short of “just cause,” in that the employee would be forced to prove a negative. We believe the better view is to allocate the initial burden of proof to the employer to prove that an employee was dismissed for “just cause” and then have the employee come forward with evidence showing that his or her dismissal was made without “just cause.” Here, SPC expressly adopted the ALJ‘s Conclusion of Law Number 2, which states “[w]here just cause is an issue, the Respondent [ESC] bears the ultimate burden of persuasion.” Taking into account “the specialized expertise of the staff of an administrative agency,” we give great deference to SPC‘s decision to place the burden of proof on ESC. High Rock Lake Assoc., 51 N.C. App. at 279, 276 S.E.2d at 475. However, in light of our Supreme Court‘s recent decision in Soles v. City of Raleigh Civil Service Comm., 345 N.C. 443, 480 S.E.2d 685, we are compelled to find that placing the burden of proof in “just cause” claims on the employee does not pose a substantial threat of erroneous termination and therefore does not violate due process.
In Soles, petitioner was hired by the City of Raleigh on 5 April 1984 as an Engineering Aide I and was promoted to Engineering Aide II on 13 August 1986. Id. at 444, 480 S.E.2d at 686. Petitioner was terminated from his employment on 2 December 1990 for ” ‘personal conduct detrimental to City service.’ ” Id. at 445, 480 S.E.2d at 686.
On appeal, our Supreme Court held that petitioner possessed no constitutionally protected property interest in his continued employment with the City, and that placing the burden of proof on him to prove he was dismissed without just cause did not violate due process. Id. at 447-48, 480 S.E.2d at 688. The Court stated “while the placement of the burden of proof is rarely without consequence and frequently dispositive of the outcome of the litigation, ‘[o]utside the criminal law area, where special concerns attend, the locus of the burden of persuasion is normally not an issue of federal constitutional moment.’ ” Id. at 449, 480 S.E.2d at 689 (quoting Lavine v. Milne, 424 U.S. 577, 585, 47 L. Ed. 2d 249, 256 (1976)). The Court also observed that a constitutional right to a certain allocation of the burden of proof exists only when a fundamental right is at issue. Soles, 345 N.C. at 449, 480 S.E.2d at 689. The Court then stated, “[w]here, as here, no fundamental right is at issue, the allocation of the burden of proof in civil cases is irrelevant to constitutional questions of procedural due process.” Id. In conclusion, the Court cited Arnett v. Kennedy, 416 U.S. 134, 40 L. Ed. 2d 15, which held that due process did not require a pre-termination evidentiary hearing for a federal employee who could be terminated only for cause, for the proposition that “if it is permissible to dismiss an employee without any evidentiary hearing whatsoever, it is similarly permissible to discharge an employee after an evidentiary hearing in which the burden of proof is placed on the employee.” Soles, 345 N.C. at 450, 480 S.E.2d at 689.
[6] While Soles involved a city employee with no constitutionally protected interest in continued employment, we are nevertheless guided by the Soles decision in determining where the burden of proof should fall in a “just cause” claim pursuant to
III. Peace‘s Motion for Rule 11 Sanctions
Pro se plaintiff Peace asserts in his brief that Rule 11 sanctions should be imposed against the ESC attorneys. Peace claims that ESC frivolously submitted yet another appeal after losing on this retaliatory discharge claim below, and additionally for appealing two other cases between these two parties. Furthermore, Peace claims the attorneys filed an appeal for the mere purpose of delay and to increase Peace‘s legal fees. In light of our rulings, this claim for sanctions is dismissed.
IV. Conclusion
In both appeals, the ALJ improperly placed the burden of proof on the employer. In Gibson, the North Carolina Supreme Court held that the burden of proof is on the employee in Title VII cases, including retaliatory discharge claims. North Carolina Dept. of Correction v. Gibson, 308 N.C. at 137, 301 S.E.2d at 87. Thus, the retaliatory discharge claim is reversed and remanded to the trial court for further remand to the ALJ for proceedings not inconsistent with this opinion. Furthermore, in light of the Supreme Court‘s decision in Soles v. City of Raleigh Civil Service Commission, 345 N.C. 443, 480 S.E.2d 685, Peace‘s “just cause” claim is remanded to the superior court for further remand for the application of the proper burden of proof. Finally, Peace‘s motion for sanctions is denied.
Reversed and remanded in No. 93 CVS 10599.
Remanded in No. 94 CVS 11517.
Judge GREENE dissents in part.
Judge GREENE dissenting in part.
I disagree with the majority‘s affirmance of the trial court‘s determination that the State Personnel Commission improperly placed the burden of proof on the Employment Security Commission of North Carolina, and would reverse the trial court on this issue.
First, I agree with the majority‘s well-reasoned explanation of why the burden of proof in a termination without just cause case is more fairly placed upon the employer. I add only that this Court has repeatedly acquiesced in the placement of the burden of proof on the employer in just cause cases. See Davis v. N.C. Dept. of Human Resources, 110 N.C. App. 730, 432 S.E.2d 132 (1993) (not addressing placement of the burden of proof on the employer); Walker v. N.C. Dept. of Human Resources, 100 N.C. App. 498, 504, 397 S.E.2d 350, 355 (1990) (affirming the trial court‘s conclusion that the employer “had not met its burden of showing just cause to uphold the terminations“) (emphasis added), disc. review denied, 328 N.C. 98, 402 S.E.2d 430 (1991); Employment Security Comm. v. Wells, 50 N.C. App. 389, 391, 274 S.E.2d 256, 258 (1981) (“not reach[ing] the question of whether [the employer] failed to carry the necessary burden of proof to show just cause for petitioner‘s dismissal from its employ” because case remanded on other grounds).
I disagree with the majority‘s conclusion that Soles v. City of Raleigh Civil Service Comm., 345 N.C. 443, 480 S.E.2d 685 (1997), mandates placement of the burden of proof on the employee in just cause cases. Soles merely stands for the proposition that, where a pre-existing rule mandates placement of the burden of proof on the employee, such placement does not violate the employee‘s due process rights. Soles, 345 N.C. at 448, 480 S.E.2d at 688. There is no pre-existing rule mandating placement of that burden on the employee in this case. Soles does not, either explicitly or implicitly, require courts to place the burden of proof on the employee in just cause cases.
Absent specific guidance from our Supreme Court or our General Assembly, I do not believe we should depart from our customary practice of placing the burden of proof on the employer in just cause cases.