IN THE DISTRICT COURT FOR POLK COUNTY

JON BATESOLE and JOHN PATRICK, Petitioners,

VS.

IOWA CIVIL RIGHTS COMMISSION, Respondent.

AA No. 1121

DECISION OF APPEAL

STATEMENT

This is an action for judicial review of a contested case decision and involves an appeal from the final decision of the Iowa Civil Rights Commission (hereinafter "Commission"). The decision of the Commission was filed on October 9, 1986, and reversed the decision of the Hearing Officer and found that Terry and Danielle Wells were discriminated against on the basis of race when they were refused the opportunity to rent a duplex located at 4118 Franklin in Des Moines, Iowa. From said decision, the petitioners have filed this Administrative Appeal.

The Court, after reviewing the entire record made before the Agency, hearing the statements and arguments of the attorneys, reviewing the briefs filed by the attorneys, and being fully advised, States:

1. The Court has jurisdiction over the subject matter of this action and over the parties hereto.

2. This is an application for judicial review of an adverse decision in a contested case after all administrative remedies have been exhausted.

FINDINGS OF FACT

1. Terry Wells, a white male, and Danielle Foster Wells, a black female, were married in November 1985. During the preceding summer, they were moving from Ames and in search of housing in Des Moines, with intended occupancy by July 15, 1985.

2. On approximately June 17, 1985, the Wells' saw a "for rent" sign on the lawn of the property at 4118 Franklin in Des Moines. Terry made an appointment to view the duplex on his way to work on following day and was shown the property by John Patrick, maintenance manager.

3. Mr. Patrick pointed out all the advantages of the duplex such as the closet space and track lighting, discussed the items for which the tenant was responsible, described the neighborhood, and gave him an application to complete which asks for information concerning personal references, credit references, length of employment, length of occupancy in previous rentals, and other objective information.

4. Terry told Mr. Patrick that he wanted Danielle to view the apartment before they decided whether to take it or not, and he made an appointment to return to view the duplex with Danielle.

5. Jon Batesole owns the rental unit in question. Although Mr. Patrick shows the units for Mr. Batesole, he has no authority to lease any of the properties owned by Mr. Batesole. As a general rule, Mr. Batesole requires that a prospective tenant have two years continuous employment with the same employer before that person could receive favorable consideration as a tenant.

6. On approximately June 24, 1985, Terry returned to the duplex with Danielle. Both noted that Mr. Patrick seemed shocked when he saw that Danielle was black. Although Mr. Patrick has shown Terry through the apartment, he remained in the kitchen while Terry showed Danielle through the duplex. The Wells' decided they wanted to rent the property and completed the application form and offered to place a deposit on the duplex. Mr. Patrick stated that he would have to check with the owner and show him the application and the decision whether or not to rent rested with the owner.

7. Mr. Patrick originally indicated that he wanted to rent the duplex by July 1, and the Wells' had agreed to begin renting on July 10. Sometime after July 4, the Wells' noticed that the property was still for rent, and Terry called Mr. Patrick to see if they could rent the duplex. He again was told by Mr. Patrick that he, Mr. Patrick, would have to check with the owner and that he had not been able to reach him because "He was in Alaska".

8. Several days later Terry again contacted Mr. Patrick, and Mr. Patrick stated that his application was being turned down because he did not have two years of continuous employment with his current employer.

9. The Wells' then sought other housing in Des Moines. The duplex was subsequently rented to a non-minority.

STATEMENT OF ISSUES

ISSUE NO. 1: Was the decision of the Iowa Civil Rights Commission supported by substantial evidence when the record is reviewed as a whole?

ISSUE NO. 2: Did the Commission's award of damages constitute the imposition of punitive damages?

RULING

Judicial review of final agency action is governed exclusively by the Iowa Administrative Procedure Act. Iowa Code Section 17A. 19 (1985). In reviewing agency action a district court exercises only appellate jurisdiction.

The petitioners contend that the Commission's decision is not supported by substantial evidence in the record. Judicial review of the Agency's decision is governed by the "substantial evidence" rule of Section 17A. 19(8)(f). In accordance with this rule, this Court must determine whether the Agency decision is supported by substantial evidence when the record is viewed as a whole. The Court is not free to interfere with an Agency's findings where there is a conflict in the evidence or when reasonable minds might disagree about the inferences to be drawn from the evidence, whether disputed or not. Evidence is substantial if a reasonable person would find it adequate for reaching a decision. 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 complainants must first establish a prima facie case of discrimination by a preponderance of the evidence. They must prove that (1) they are a member of a protected class, (2) They applied for and were qualified to rent the unit involved, (3) That they were rejected by the petitioners, and (4) that a non-minority was accepted as a tenant.

Evidence supporting the elements of a prima facie case establishes a legally mandatory presumption, and both the Hearing Officer and the Commission determined that the complainants had established a prima facie case of racial discrimination, and this Court agrees.

Once the presumption has been created, the petitioners have the burden of producing admissible evidence showing a 'legitimate, non-discriminatory reason" for the challenged action. In other words, there must be a non-discriminatory reason for not renting the duplex to the complainants.

Again in this case, both the Hearing Officer and the Commission recognized that there is a legitimate business reason for imposing the requirement of two years continuous employment. It then developed upon the complainants to establish by a preponderance of the evidence that the proffered justification for not renting to them was merely pretextual. This can be done by two ways: (1) directly by persuading the Court that a discriminatory reason likely motivated the petitioners or (2) indirectly by showing that the petitioners' proffered explanation is unworthy of credence.

The Commission found such evidence that the reason for the rejection of the complainants was merely pretextual for racial discrimination.

In the case entitled Woodbury County v. Iowa Civil Rights Commission , 335 N.W. 2d, the Supreme Court, citing a Federal Court opinion, stated:

"Employer's stated legitimate reason must be reasonably articulated and non-discriminatory, but does not have to be a reason that the judge or jurors would act on or approve. An employer is entitled to make his own policy and business judgement, as long as this is not a pretext for discrimination. The reasonableness of the employer's reasons may be probative whether they are pretext. The more idiosyncratic or questionable the employer's reason, the easier it will be to expose it as a pretext, if, indeed it is one."

The Court Finds that the Commission was correct in determining that the complainants established by a preponderance of the evidence that the reason was merely a pretext of discrimination.

The answer to Issue No. 1, therefore, is "yes". The second Issue concerns the Commission's award of damages.

Iowa Code Section 601A.15(8) provides in part as follows: "Payment to the complainant of damages for an injury caused by the discriminatory or unfair practice which damages shall include but are not limited to actual damages, court costs and reasonable attorney fees. " "Actual damages" is defined as "The amount awarded to a complainant in compensation for his actual and real loss or injury."

Under the "Chauffeurs" case, 394 N.W. 2d 375, damages for emotional distress, unaccompanied by any physical trauma, can be awarded where the discriminatory act is intentional or willful. However, an administrative agency cannot award punitive damages absent express statutory language allowing such an award. The Iowa Civil Rights Act does not give the Commission the express authority to award punitive damages, hence no punitive damages in Iowa.

Although damages for emotional distress are allowed in Iowa, the evidence on behalf of the complainants did not show any economic loss, nor did the parties complain of any symptoms indicative of emotional distress such as headaches, nausea, loss of appetite, tension, depression, or loss of time from work. There is no evidence offered by the complainants that they have sustained emotional distress; therefore, the damages awarded by the Commission are illegal and punitive in nature.

Additionally, there is no basis in law or in fact to require the petitioners to pay $100 per month to the complainants; therefore, that award is declared void and invalid.

The complainants were humiliated, surprised, and frustrated by the actions of the petitioners; and the petitioners shall Pay to the complainants, Danielle and Terry Wells, for actual damages, the sum of $500 each.

IT IS THEREFORE THE ORDER OF THE COURT that the decision of the respondent Agency is affirmed in that the petitioners have violated the Iowa Civil Rights Act by denying each complainant housing because of race.

IT IS THE FURTHER ORDER OF THE COURT that the decision of said Agency is reversed as to the amount and kind of damages and that all damages awarded in said decision are illegal and totally unsupported by the facts and are declared void an held for naught.

IT IS THE FURTHER ORDER OF THE COURT that the petitioners shall pay to the complainants, Terry Wells and Danielle Foster Wells, as actual damages, the sum of $500 each.

Costs of this Appeal are charged to the petitioners.

Dated this 5th day of October, 1988.

Ray A. Fenton

JUDGE OF THE FIFTH JUDICIAL DISTRICT OF IOWA

Copies to:

Eugene E. Olson/Douglas A. Fulton
Teresa Baustian