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