Opinion
No. 2-893 / 02-0063.
Filed February 28, 2003.
Appeal from the Iowa District Court for Dubuque County, Bruce B. Zager, Judge.
On appeal from the district court's reversal of an award of damages by the Dubuque Human Rights Commission in a race discrimination claim. REVERSED.
William Blum of Dubuque Human Rights Commission, Dubuque, and Dorothy O'Brien and Brad Reynolds of O'Brien Greve, P.L.C., Davenport, for appellants.
Michael Lied of Howard Howard Attorneys, P.C., Peoria, Illinois, and Brendan Quann of O'Connor Thomas, P.C., Dubuque, for appellee.
Heard by Mahan, P.J., Vaitheswaran, J., and Brown, S.J.
Senior judge assigned by order pursuant to Iowa Code section 602.9206 (2001).
The Dubuque Human Rights Commission awarded damages for employment discrimination. On judicial review, the district court reversed. We conclude the agency's final decision is supported by substantial evidence. Accordingly, we reverse.
I. Background Facts and Proceedings
Samuel Taylor worked at FDL Foods, later Farmland Foods, Inc., from 1983 until early 1998. His primary job was in the smoked meats department where he generally worked second shift.
Over the years, Taylor, who is black, had difficulty securing the shift and duties he wanted at the hog processing plant. He attributed much of this difficulty to a foreman named Dick Sherman, who is white.
Taylor filed a civil rights complaint with the Dubuque Human Rights Commission. He sought damages for 1) unlawful racial discrimination, 2) a hostile work environment, 3) constructive discharge, and 4) unlawful retaliation. Following a hearing, an administrative law judge rejected each of the claims. On intra-agency review, the Commission adopted the administrative law judge's preliminary fact findings but reversed his findings of ultimate fact and his legal conclusions. The Commission ruled in favor of Taylor on all his claims and awarded $72,292 in damages.
Farmland Foods sought judicial review. The district court reversed the Commission, finding insufficient evidence to support a key element of Taylor's claim. Taylor now seeks further judicial review.
II. Scope and Standards of Review
A. Decision Subject to Review . Where a final agency decision differs from an administrative law judge's proposed decision, the final decision is the one subject to judicial review. Iowa State Fairgrounds Sec. v. Iowa Civil Rights Comm'n, 322 N.W.2d 293, 294 (Iowa 1982). Even where the final decision does not contain an explanation of why a different result was reached, a proposed decision is not accorded elevated status. Id. at 295.
As a preliminary matter, Taylor contends the district court reviewed the wrong agency decision. We disagree. Although the court made reference to the proposed decision and to certain of the administrative law judge's findings, its focus was clearly on the Commission's decision and whether that decision was supported by substantial evidence on the record as a whole. See Iowa Code § 17A.19(8)(f) (1999). We find no error in this aspect of the district court's ruling.
B. General Standards of Judicial Review. In reviewing agency action, a district court functions in an appellate capacity to correct errors of law. Wieslander v. Iowa Dep't of Transp., 596 N.W.2d 516, 520 (Iowa 1999). Our court's review, then, is limited to deciding whether the district court correctly applied the law. Iowa Civil Rights Comm'n v. Woodbury County Comm. Action Agency, 304 N.W.2d 443, 446 (Iowa Ct.App. 1981). In making that determination, we apply the judicial review standards set forth in Iowa Code section 17A.19(8) to decide if our conclusion is the same as the district court. Foods, Inc. v. Iowa Civil Rights Comm'n, 318 N.W.2d 162, 165 (Iowa 1982).
The parties agree the applicable standard is whether the Commission's decision is "unsupported by substantial evidence in the record made before the agency when that record is viewed as a whole." See Iowa Code § 17A.19(8)(f). Evidence is substantial if a reasonable mind would accept it as adequate to reach a given conclusion. Peoples Mem'l Hosp. v. Iowa Civil Rights Comm'n, 322 N.W.2d 87, 91 (Iowa 1982). The possibility of drawing two inconsistent conclusions from the evidence does not prevent an administrative agency's findings from being supported by substantial evidence. Woodbury County Cmty. Action Agency, 304 N.W.2d at 446; accord Iowa State Fairgrounds Sec., 322 N.W.2d at 299. An agency's fact findings are binding on appeal unless a contrary result is demanded as a matter of law. Eaves v. Bd. of Med. Exam'rs, 467 N.W.2d 234, 237 (Iowa 1991).
Although the action was taken by a municipal agency, Chapter 17A standards govern our review. See Consol. Freightways, Inc. v. Cedar Rapids, Civil Rights Comm'n, 366 N.W.2d 522, 526 (Iowa 1988).
III. Merits of Taylor's Racial Discrimination Claim . Taylor filed his claim pursuant to a Dubuque ordinance. The ordinance states in pertinent part, "[i]t shall be an unfair or discriminatory practice for any: (1) person to . . . discharge any employee, or to otherwise discriminate in employment against . . . any employee because of the race . . . color . . . of such employee. . . ." Dubuque Code § 27-71. This language is virtually identical to the language contained in our civil rights act. See Iowa Code § 216.6(1). Therefore, standards applicable to that act are applicable here. Consolidated Freightways, Inc. v. Cedar Rapids Civil Rights Comm'n, 366 N.W.2d 522, 526 (Iowa 1985). Additionally, we may look to federal law as persuasive authority. Iowa State Fairgrounds, 322 N.W.2d at 296.
Sec. 27-71. Prohibited Practices:
It shall be an unfair or discriminatory practice for any:
(1) Person to refuse to hire, accept, register, classify, or refer for employment, to discharge any employee, or to otherwise discriminate in employment against any applicant for employment or any employee because of the race, creed, color, sex, age, national origin or religion of such applicant or employee, unless based upon the nature of the occupation.
(2) Labor organizations or the employees, agents, or members thereof to refuse to admit to membership any applicant, to expel any member, or to otherwise discriminate against any applicant for membership or any member in the privileges, rights, or benefits of such membership because of the race, creed, color, sex, age, national origin or religion of such applicant or member.
(3) Employer, employment agency, labor organization, or the employees, agents, or members thereof, to directly or indirectly advertise or in any other manner indicate or publicize that individuals of any particular race, creed, color, sex, age, national origin or religion are unwelcome, objectionable, not acceptable, or not solicited for employment or membership, unless based upon the nature of the occupation. (1976 Code, § 21-56; Ord. 20-93, § 6, 4-19-1993; Ord. 39-96, § 3, 7-1-1996).
Employment discrimination cases may be based on claims of disparate treatment or disparate impact. Woodbury County Cmty. Action Agency, 304 N.W.2d at 448. The parties agree this is a case of alleged racial discrimination based on disparate treatment. They also agree the McDonnell-Douglas approach to proving discrimination applies here. See Vaughan v. Must, Inc., 542 N.W.2d 533, 538 (Iowa 1996) (summarizing difference between Price Waterhouse and McDonnell-Douglas approaches); McDonnell Douglas v. Green, 411 U.S. 792, 93 S.Ct. 1817, 36 L.Ed.2d 668 (1973); Price Waterhouse v. Hopkins, 490 U.S. 228, 109 S.Ct. 1775, 104 L.Ed.2d 268 (1989).
Under this approach, an employee must first establish a prima facie case of discrimination. Sievers v. Iowa Mut. Ins. Co., 581 N.W.2d 633, 638 (Iowa 1998). Where there is an existing employer-employee relationship, this requires proof the employee: 1) belongs to a protected group, 2) was qualified to retain the job, and 3) suffered adverse employment action. Id. The employer may then raise a legitimate nondiscriminatory reason for the action. Id. At this point, the employee must establish the reason was pretextual. Id.
The Commission determined "Farmland discriminated against Taylor because of Taylor's race." The Commission relied on the administrative law judge's thirteen preliminary fact findings and its own finding "that Taylor was treated differently than other white co-workers."
In reviewing the Commission's action, the district court began by articulating the following elements it believed Taylor had to establish to make out a prima facie case of discrimination: 1) he is African-American 2) he was qualified for the job, 3) he suffered adverse employment action, and 4) he was treated less favorably than others not in the protected class. The court then determined there was not "substantial evidence in the record to show Taylor either suffered adverse employment action or that he was treated less favorably than others not in the protected class."
We believe what the court styled as the fourth element of Taylor's prima facie case was in fact an articulation of the inference of discrimination that could be drawn if Taylor established the first three elements. See, e.g., Sievers, 581 N.W.2d at 638; Must, Inc., 542 N.W.2d at 538 (listing first three elements); cf. Hamer v. Iowa Civil Rights Comm'n, 472 N.W.2d 259, 264 (Iowa 1991) (adding fourth element of whether it is more likely than not that the termination was based on an impermissible consideration); Jenkins v. Wal-Mart Stores, Inc., 910 F. Supp. 1399, 1418-19 (N.D.Iowa 1995) (stating disparate treatment theory means employer intentionally treats some people less favorably than others because of impermissible factor).
We will begin by focusing on the only disputed element of Taylor's prima facie case: whether he suffered adverse employment action. We will then examine the remaining parts of the claim: whether Farmland provided a legitimate, non-discriminatory reason for the action and whether Taylor established that the reason was pretextual.
A. Adverse Employment Action. Whether a person has suffered adverse employment action is a fact dependent question. Channon v. United Parcel Serv., Inc., 629 N.W.2d 835, 862 (Iowa 2001). It turns on whether there is a "material employment disadvantage, such as change in salary, benefits, or responsibilities." Jacob-Mua v. Veneman, 289 F.3d 517, 522 (8th Cir. 2001). Adverse employment action is a serious employment consequence that adversely affects or undermines an employee's position, even if the employee is not discharged, demoted, or suspended. Baker v. John Morrell Co., 220 F. Supp.2d 1000, 1019 (S.D.Iowa 2002) (quoting Kim v. Nash Finch, Co., 123 F.3d 1046, 1060 (8th Cir. 1997)) (holding allegation employer made job more difficult and increased employee's stress was sufficient to create genuine issue of material fact on "adverse employment action" element).
The district court examined twelve acts that it believed might qualify as adverse employment action. The court stated, "[t]here does not appear to be any substantial evidence in the record to support any of the conclusions that the actions, if taken, were racially motivated." The court further stated, "the court is convinced that there is substantial evidence in the record to support each of the explanations as provided by counsel for Farmland as to the claims of racial discrimination."
To make out a prima facie case of race discrimination, Taylor was not required to show that Farmland's acts were racially motivated. St. Mary's Honor Ctr. v. Hicks, 509 U.S. 502, 506, 113 S.Ct. 2742, 2747, 125 L.Ed.2d 407, 416 (1993). He only needed to establish the three previously stated elements: race, qualification, and adverse employment action. Once he did so, he was entitled to a presumption of racial discrimination. Id.; Sievers, 581 N.W.2d at 638 ("Establishment of the prima facie case in effect creates a presumption that the employer unlawfully discriminated against the employee."). Additionally, the employer's proffered nondiscriminatory reasons for the adverse employment action were not relevant in deciding whether Taylor made out his prima facie case. See Hicks, 509 U.S. at 511 n. 3, 113 S.Ct. at 2748 n. 3, 125 L.Ed.2d at 418 n. 3 (noting if finder of fact finds prima facie case is supported by preponderance of evidence, it must find existence of presumed fact of unlawful discrimination, which shifts burden to employer to articulate legitimate nondiscriminatory reason for action). Those proffered reasons only became relevant after Taylor established his prima facie case. Id.; Sievers, 581 N.W.2d at 638-39. In sum, the only question before the district court with respect to Taylor's prima facie case was whether there was substantial evidence in the record as a whole to establish that Taylor suffered adverse employment action.
On this question, the Commission incorporated certain key findings of the administrative law judge. The ALJ found that Taylor and Sherman "did not get along and had not gotten along for many years. Dick Sherman treated Sam Taylor differently than he treated white employees John Cate and Dennis Rowles." The ALJ also found Sherman "picked" on Taylor, paid more attention to him than non-minority employees, and directed comments to him on the production line. The ALJ found Taylor's "home-base" was in the smoked meats department but:
he was temporarily assigned to the hog kill department where he spent several months doing various jobs, including blowing out brains, the scissors job, working on the chitlings line, vacuuming, the pans job, the kidney job, and fill in jobs where a need existed. Some of these jobs were more desirable than others because they were less physically demanding and messy.
The ALJ found:
Sam Taylor made complaints about work and shift assignments, recall following layoffs and problems he experienced when temporarily assigned, a perceived failure by Farmland management to properly use seniority in connection with layoffs, temporary and shift assignments and recall rights and in regard to his ongoing problems with Dick Sherman. On at least two occasions, in October 1996 and some time between February and April 1997, Sam Taylor complained to Plant Manager Kyle Whited that he believed he was being treated differently than white employees because of his race.
All these findings are supported by substantial evidence on the record as a whole. Indeed, they are essentially undisputed. They support the Commission's implicit finding of adverse employment action. It was error to hold otherwise.
Although the Commission did not explicitly state Taylor suffered adverse employment action, it cited several acts that effectively amount to that. See Fairgrounds, 322 N.W.2d at 298 (examining evidence supporting underlying issue of fact rather than findings of ultimate fact). Additionally, while the agency did not cite and apply the elements of a race discrimination claim, it is possible to "work backward" from the agency decision and to deduce what must have been the agency's legal conclusions and fact findings. Norland v. Iowa Dep't of Job Service, 412 N.W.2d 904, 909 (Iowa 1987); cf. City of Fort Dodge v. Civil Service Comm'n, 562 N.W.2d 438, 440 (Iowa Ct.App. 1997) (holding that in judicial review proceeding, where no rule 179(b) motion is made or an issue is not raised, we will assume as fact an unstated finding necessary to support the trial court's judgment).
B. Legitimate Non-Discriminatory Reason. As noted, the second step in the McDonnell-Douglas analysis is the employer's articulation of a legitimate, non-discriminatory reason for the adverse employment action. Must Inc., 542 N.W.2d at 538. Taylor appears to concede that Farmland presented such reasons. The Commission adopted the following ALJ fact finding articulating those reasons:
Lay offs affected white, as well as minority employees. Employees laid off to other departments were considered "temporary" and were assigned work on an as needed basis. The plant work environment was noisy and stressful. The work environment in hog kill was worse than in the smoked meats or ham wrap departments. There were shortages of personnel and high production quotas. It was common to shift personnel, especially temporary workers from one job to another to keep the operation going. Some jobs were considered to be more desirable than others because they were less physically demanding and messy."
This fact finding is supported by substantial evidence.
C. Pretext . Taylor had the ultimate burden to establish that the reasons for the adverse employment action were pretextual. Must, Inc., 542 N.W.2d at 538-39; see also Roberts v. Swift and Co., 198 F. Supp.2d 1049, 1069 (S.D.Iowa 2002) (question is whether employer acted with racial animus). Specifically, Taylor had to persuade the Commission that: 1) a discriminatory reason more likely motivated the employer, or 2) the proffered reasons were not worthy of belief. Hy-Vee Food Stores, Inc. v. Iowa Civil Rights Comm'n, 453 N.W.2d 512, 524 (Iowa 1990).
It was within the agency's prerogative to determine whether the employer's reasons for adverse employment action were pretextual. Fairgrounds, 322 N.W.2d at 298. The Commission reasonably could have found from the evidence that Taylor established pretext. Id.
Taylor's testimony concerning discriminatory intent was corroborated by both Cate and Rowles. With respect to the assignment of temporary jobs, Cate testified "[w]henever I got transferred to another department, I stayed on one job." He further testified Taylor had been in the smoked meats department longer than he had but Taylor was the last person to be returned to his home-base. He stated Sherman "didn't pick on anybody as much as he picked on Sam. . . ." He testified that, although the whole crew was involved in production issues, Sherman singled out Taylor to criticize. He stated "[w]hen Sam was on duty, he was there all — he would make sure he was in and out of the department every half hour. Whenever Sam wasn't there, I mean if Sam was laid off, you wouldn't see Dick, some days I wouldn't even see him two or three times a day." Rowles seconded this observation. He stated Taylor was treated the worst of any of the employees in the smoked meats department, despite the fact that, in his view, Taylor "was probably one of the best workers we had down in smoked meats." Like Cate, he pointed to Sherman's singling out of Taylor for criticism on production issues as well as on the length of bathroom breaks. Cf. Baker v. John Morrell Co., 220 F. Supp. at 1016 (stating Baker's showing she was only allowed five minute breaks while co-workers received thirty and forty-five minute breaks generated material issue of fact on question of disparate treatment).
There is certainly contradictory evidence on the key question of discriminatory intent. However, where evidence is in conflict or reasonable minds might disagree about the conclusions to be drawn, the court is bound to accept the agency's findings. Eaves, 467 N.W.2d at 237. The Commission resolved the contradictions in favor of Taylor, finding "the intensity of criticism, scrutiny and unfair treatment of the only African-American is persuasive of the discriminatory intent." As the Commission's decision is supported by substantial evidence, "[t]he fact that an opposite result would have also been sufficiently supported does not provide a basis for upsetting the decision." Fairgrounds, 322 N.W.2d at 299.
IV. Remaining Claims and Defenses
In light of our resolution of the racial discrimination claim, we find it unnecessary to resolve Taylor's hostile work environment claim. We also need not address Taylor's retaliation and constructive discharge claims as he does not challenge those district court's rulings. As for Farmland's remaining defenses, we find they are unnecessary to decide or without merit.
V. Disposition
The agency record as a whole contains substantial evidence of Taylor's race, qualifications, and adverse employment action. The record also contains substantial evidence to support the agency's finding that Farmland's legitimate non-discriminatory reasons for the action were pretextual. The commission, therefore, reasonably could have found from the evidence that Taylor suffered race discrimination, and the district court erred in holding otherwise. We reverse the district court's decision.