IN THE IOWA DISTRICT
COURT FOR CERRO GORDO COUNTY
BEST WESTERN HOLIDAY MOTOR LODGE, LESLIE KINSETH, and
KINSETH HOLIDAY MOTOR LODGE CORP.,
Petitioners,
VS.
IOWA CIVIL RIGHTS COMMISSION,
Respondent.
Cause No. 50205
234-272
JUDGMENT
On the 24th day of August,
1989, this matter was presented to the court upon petition for
judicial review filed herein on January 16, 1987. Mark R. Schoeller
participated on behalf of petitioners, Best Western Holiday Motor
Lodge, Leslie Kinseth, and Kinseth Holiday Motor Lodge Corp. Teresa
Baustian participated on behalf of the respondent, Iowa Civil
Rights Commission.
Counsel argued, and counsel have filed briefs and this matter has been fully submitted, and the court now makes the following findings, conclusions and judgment:
FINDINGS OF FACT AND CONCLUSIONS
An original complaint was
filed with the Iowa Civil Rights Commission by Renita C. Harper
on November 7, 1985. The complainant, a black, alleged that the
respondents, Best Western Holiday Motor Lodge, Leslie Kinseth
and Kinseth Holiday Motor Lodge Corp., had discriminated against
her by reason of her race. After the usual process and hearing,
proposed findings of fact, conclusions of law and recommended
decision and order were prepared by the hearing officer, same
having been dated September 5, 1986. The hearing officer proposed
15 separate paragraphs of findings, which findings will not be
detailed verbatim herein. In these findings, it was found that
in August of 1984 the complainant, Renita C. Harper, and her friend,
a white person, went to the motor lodge to apply for the position
of housekeeper which had been advertised. Their testimony was
that they each filled out forms and returned them to the desk
clerk. The complainant's friend, Susan K. Bergdale, was ultimately
called for an interview and was hired as a housekeeper. Ms. Bergdale
encouraged Renita Harper to follow up and inquire again about
employment. Although denied by the respondents, Renita Harper
established that she had made telephone calls and that she had
never received a response nor an interview. The Harper complaint
was filed in November of 1984, and hearing officer found that
in December, 1984, after he had been served with complaint that
Mr. Kinseth called complainant to come in. The hearing officer
found that the telephone call was not a job offer but merely the
possibility of going in for a job interview. The hearing officer
further found that Harper was concerned as to whether or not any acceptance
of work would nullify her chance of getting back pay, further
finding that Mr. Kinseth had expressed the belief that she was
not entitled to back pay.
In the proposed conclusions
of law, it was determined that the complaint was properly processed
and that the burden was upon the complainant to prove by preponderance
of the evidence a prima facie case of discrimination. Secondly,
if the plaintiff had so succeeded, that the burden shifted to
the defendant "to articulate some legitimate non-discriminatory
reason for the employee's rejection." And, third, should
the defendant carry such burden,, the plaintiff must then have
an opportunity to prove by a preponderance of the evidence that
the legitimate reasons offered by the defendant were not its true
reasons but were a pretext for discrimination. Such allocation
of burdens has been adopted by the Iowa Supreme Court in the case
of Linn Co-operative Oil Company v. Quigley, 305 N.W.2d
729 (Iowa 1981).
The conclusions then continue,
and it was determined that the complainant had carried her initial
burden. It was concluded that the elements of a prima facie case
(1) membership in a protected class; (2) application for an available
position for which applicant is qualified; (3) not hired despite
qualifications; and (4) position remained open and employer continued
to seek applicants from persons of complainant's qualifications
had been established. Therefore, it was concluded that the presumption
of illegal discrimination followed.
The petitioners as respondents
in the action before the commission claimed that they could not
find the Harper application and could not remember her calling
for an appointment. Mr. Kinseth also testified that he had a good
record in connection with the hiring of black persons considering
the percentage of blacks available in the job market in this particular
area. It was then concluded that the complainant must demonstrate
that the proffered reasons were not the true reasons for the employment
decision. Mr. Kinseth and his employees steadfastly held that
they did not have the Harper application not any update thereof.
By reason of the testimony of Ms. Bergdale and one Barbara Woolery,
it was concluded that the testimony of Harper was corroborated.
It was concluded that the respondents were liable for the failure
to hire Harper. The hearing officer concluded that Chapter 601
A had been violated because of the failure to hire Renita Harper.
The hearing officer further
reviewed that fact that it is the duty of the complainant, Renita
Harper, to look for work to mitigate damages. It was further noted
that it is the burden of the respondent, here the employer, to
prove that the complainant failed to mitigate damages. The hearing
officer properly concluded that the Supreme Court has held that
a complainant forfeits the right to back pay if a job substantially
equivalent to the one denied is refused. Ford Motor Company
v. EEOC, 73 L.Ed.2d 721 (1982). In the Ford Motor Company
case, the court held that the rejection of an employer's unconditional
job offer ends the accrual of potential back pay liability. The
court in the Ford case further noted that a claimant's obligation
to mitigate damages does not require
acceptance of an offer
that conditions employment of a compromise of the discrimination
claims. It is further important to note that a complainant who
accepts an unconditional offer and prevails on the merits of the
discrimination claim remains entitled, at the court's discretion
to back pay accrued before the effective date of the offer. If
the complainant refuses an offer of reinstatement not conditioned
on compromising the discrimination claim, there is a breach of
the duty to mitigate damages. In this case, the hearing officer
upon the evidence introduced at hearing concluded that there was
not an unconditional offer of employment made to Harper. The September
5, 1986, proposal included a recommended decision and order. After
further process, a final order was issued on November 24, 1986.
In this final order, the Iowa Civil Rights Commission adopted
the hearing officer's findings of fact, conclusions of law and
recommended decision, however, the order was modified, and it
was as follows:
2. IT IS HEREBY ORDERED that Respondents shall cease and desist from the discriminatory practice of not treating Black applicants for employment in the same way that they treat white applicants for employment.
3. IT IS FURTHER ORDERED that Respondents shall offer Renita C. Harper the next available position in housekeeping at the Holiday Motor Lodge in Clear Lake, Iowa. Harper shall within 10 days of the issuance of the final decision in this case provide Respondents with her current address. Respondents shall notify Harper by certified mail when the position is available and she shall be given 10 days from receipt of that mail to accept the position. If she does not respond within that time, this provision is void.
4. IT IS FURTHER OREDERED that Respondents shall:
a. Post in conspicuous places on the premises of the lodge, Commission approved notices of non-discrimination policy;
b. Include in all employment advertising that they are an Equal Opportunity Employer.
c. Develop a policy and procedure plan for processing applications for employment and submit it to the Commission for approval within 30 days of the issuance of the final decision in this case.
d. Report to the Commission for a period of one year from date of this order detailed information as to all employment applications and hiring including identity by race.
5. IT IS FURTHER ORDERED that Respondents shall pay the Iowa Department of Human Services, Cerro Gordo County Office, Mason City, Iowa, $1,198.81 as reimbursement for monies provided Renita C. Harper from August 23, 1984 to December 15, 1984 and $5,109.00 as reimbursement for monies provided Renita C. Harper from January 1985 through May 15, 1986; Respondents shall pay Renita C. Harper the difference between the would have earnings $5,242.08 and the amount she acually received in AFDC or $133.08, plus interest at 10% per annum from November 7, 1984 until paid in full."
On February 5, 1987, a modified
final order was issued. This final order deleted item number 5
of the final order and in substitution thereof the following was
ordered:
"IT IS FURTHER ORDERED that Respondents shall pay the Iowa Department of Social Services, Cerro Gordo County Office, Mason city, Iowa, $420.81 as reimbursement for monies provided Renita C. Harper from August 23, 1984 to December 15, 1984 and $3,368.46 as reimbursement for monies provided Renita C. Harper from January 1985 through May 1986 beyond ADC grant money she would have received if she had been employed by Respondent; Respondents shall pay Renita C. Harper $2,518.54 plus interest at 10% per annum from November 7, 1984 until paid in full."
The petitioners in their
petition for judicial review filed January 16, 1987, claim that
the Iowa Civil Rights Commission have made findings and conclusions
which are not supported by substantial evidence in the record
made before the agency, further claiming that the findings and
conclusions are unreasonable and arbitrary when the record is
viewed as a whole. These petitioners request the court to reverse
the commission and that this discrimination claim be dismissed
at complainant's costs.
Judicial review of agency
action taken by the Iowa Civil Rights Commission is made by the
Iowa District Court according to the Iowa Administrative Procedure
Act which is Chapter 17A of the Iowa Code. See Section 17A.19.
The Iowa District Court acts in an appellate capacity for the
purposes of correcting errors of law specified in Section 17A.19(8),
this section setting forth the grounds upon which an agency action
may be reversed or modified or vacated and set aside. See Jackson
County Public Hospital v. Public Employment Relations Board,
280 N.W.2d 426. In a judicial review matter such as this one,
the role of the court is restrictive. The legislature has seen
fit to provide that the function of making findings of fact has
been entrusted to the particular agency before whom this contested
case arose. In a judicial review matter, the facts are either
in dispute or are not in dispute. If the facts are not in dispute,
the district court proceeds to the question of law of whether
the facts found justify the agency's order. If the facts are in
dispute, however, the Iowa District Court reviews the record in
the manner specified in Section 17A.19(7) in order to determine
whether, as a matter of law, there was substantial evidence to
support the findings of fact made by the agency. See Section 1
7A. 1 9(8)(f).
The latter section is the
"substantial evidence" rule in review of agency action.
See Peoples Memorial Hospital v. Iowa Civil Rights Commission,
322 N.W.2d 87. In this case, the court says that evidence
is substantial if a reasonable person would find it adequate for
reaching a decision. The court in this case quoted the case of
Woods v. Iowa Department of Job Service, 3115 N.W.2d 838.
In the Woods case, the court has stated that the mere possibility
that the record would support another conclusion does not permit
the district court or the Supreme Court to make a finding inconsistent
with the agency's findings so long as there is substantial evidence
to support it. The court in the Woods case further went
on to indicate that the possibility of drawing two inconsistent
conclusions from the evidence did not prevent administrative agency's
finding from being supported by substantial evidence. In other
words, the court was indicating that it was necessary to take
into account whatever record there was which fairly detracted
from the weight of the believed substantial evidence. The court
in the Peoples case further stated that the question is
not whether there is sufficient evidence to warrant a decision
the agency did not make but, rather, whether there is substantial
evidence to warrant the decision it did make.
The court finds and concludes
that it has been established that all of the findings and conclusions
of the administrative agency were supported by substantial evidence
except upon the finding that the complainant, Renita C. Harper,
had mitigated her damages. The testimony of Leslie Kinseth was
that after Renita Harper had applied for the civil rights discrimination
and had filed the discrimination charge he got her telephone number
from the complaint form and called her. The following testimony
was set forth on page 37 of the transcript:
"A I said to her that we did have a position in the housekeeping department, and if she would like it, to come in and talk to me about it, and we'll get her started.
Q And why was it that you called her?
A Basically just to show my good faith, that I didn't discriminate on race, and just to -- and also we had a position open at that time too. That was the first consideration, that a position was open at that time, and then to show her I'm not discriminatory.
Q And did she accept employment?
A No, she did not.
Q Did she indicate why?
A She said that she wanted to talk to Lionel Foster to make sure that she would be able to get her back pay for discrimination.
Q And do you know, did she talk to Mr. Foster?
A She said that she was going to call him. I don't know that she did.
Q Did she ever call you back, then?
A No, she did not.
Q It she did, did you ever receive the telephone call?
A No, I did not."
In rebuttal testimony from
Miss Harper, which is set forth on pages 55 and following in the
transcript, Miss Harper acknowledges the December, 1984, call
from Mr. Leslie Kinseth and acknowledges that he told her that
he had an opening in housekeeping. She further acknowledges that
she interrupted his telephone conversation, alking him that if
he decided to give her a job, would she get her back pay back.
Both Mr. Kinseth and Miss Harper indicate that there was discussion
about the back pay and that Mr. Kinseth did not believe that he
had discriminated and owed Miss Harper any back pay, however,
all of the negotiation was initiated by Miss Harper. In her rebuttal
testimony, Miss Harper further acknowledges as Mr. Kinseth had
stated that she was going to talk to Mr. Foster. Miss Harper in
her rebuttal testimony further acknowledged that she told Mr.
Kinseth that she would get back to him after she had talked to
Mr. Foster. She further acknowledged in this testimony that she
talked to Mr. Foster, and she further acknowledged that she did
not get back to Mr. Kinseth. Interestingly enough, this type of
testimony is that same type of testimony relied upon by the commission
in connection with the claimed telephone calls made by Miss Harper
to the desk at the motor lodge and her testimony that no one ever
called her back. Based upon such testimony, it was concluded that
a prima facie case of discrimination had been established.
Miss Harper admits that
Mr. Kinseth called following her complaint; that he had an opening
in housekeeping; that she told him she needed to talk to Lionel
Foster; that she would get back to him; and that she never did
get back to him as she said she would. The discussion she admits
initiating concerning back pay entitlement should not detract
frorn Mr. Kinseth's statement of purpose for his telephone call
to the complainant. The failure of the complainant to call back
is just as vital as the employer's failure to return the Harper
calls.
The court concludes that the conclusion of the commission that "... there was not an unconditional offer of employment made to Harper" is not supported by substantial evidence. The evidence reviewed above as found in the transcript, that is, the testimony of Mr. Leslie Kinseth and the testimony of Renita Harper, do not support such a conclusion. The court further concludes that without such a conclusion it has been established by requisite proof that the complainant, Renita C. Harper, failed to mitigate her damages. The court concludes that the rejection of the unconditional job offer ends the accrual of potential backpay liability. Accordingly, the court now concludes that the agency action should be affirmed except for the issue of mitigation of damages and that the findings and conclusions should be affirmed except for the conclusion set forth above and that the agency's order should be affirmed except for the order directing the payment of back pay after December, 1984. The court now concludes that the agency's final order should be modified in this regard.
JUDGMENT
NOW, THEREFORE, the court
orders and adjudges that the petition for judicial review is affirmed
in all respects except as to the agency's conclusion relative
to mitigation of damages. The court orders that the agency shall
modify its final order deleting that portion of the back pay award
after the month of December, 1984.
Any accruing court costs herein as taxed by the clerk of this court shall be paid by the petitioners, and judgment is entered therefor.
Dated this 28th day of December, 1989.
Judge of the Second Judicial
District of Iowa
Clerk shall furnish copies to:
Mark R. Schoeller
Teresa Baustian