Armstrong v. Tennessee Department of Veterans Affairs

JOE E. ARMSTRONG, )

)

Petitioner/Appellee, )

) Appeal No.

) 01-A-01-9610-CH-00476

VS. )

) Davidson Chancery

) No. 95-1996-III

TENNESSEE DEPARTMENT OF )

VETERANS AFFAIRS, COMMISSIONER )

FRED TUCKER in his official capacity as )

Commissioner of the Tennessee Department )

of Veteran Affairs, TENNESSEE CIVIL )

FILED

SERVICE COMMISSION and ELEANOR )

July 2, 1997

E. YOAKUM, in her official capacity as )

Secretary of the Tennessee Civil Service )

Cecil W. Crowson

Commissioner, )

Appellate Court Clerk

)

Respondents/Appellants. )

COURT OF APPEALS OF TENNESSEE

MIDDLE SECTION AT NASHVILLE

APPEALED FROM THE CHANCERY COURT OF DAVIDSON COUNTY

AT NASHVILLE, TENNESSEE

THE HONORABLE ROBERT S. BRANDT, CHANCELLOR

PETER M. OLSON

OLSON & OLSON, PLC

114 Franklin Street

Clarksville, TN 37040

Attorney for Petitioner/Appellee

JOHN KNOX WALKUP

Attorney General and Reporter

JAMES C. FLOYD

Assistant Attorney General

450 James Robertson Parkway

Nashville, TN 37243-0490

Attorney for Respondents/Appellants

AFFIRMED AND REMANDED

BEN H. CANTRELL, JUDGE

CONCUR:

TODD, P.J., M.S.

WELLES, J.

OPINION

The question in this case is whether a state employee protected by civil

service has a right to be heard before being reclassified to the unprotected executive

service. The Chancery Court of Davidson County held that the employee had a right

to grieve the reclassification. We affirm.

I.

The appellee, Joe E. Armstrong, was initially hired at the Tennessee

Department of Veteran Affairs ("TDVA") in May of 1989 in the position of

Administrative Service Assistant 1, an executive position. In the Spring of 1994, by

which time Mr. Armstrong had been promoted to the position of Administrative

Assistant 4, he was informed that his employment status would be transferred from

executive to career service. W. D. Manning, the Commissioner of the TDVA at the

time, made a written request for such a change "due to a change in the reporting

relationship." He wrote that "[p]rior to September 20, 1993 [Mr. Armstrong's position

along with one other] reported directly to me" but that they currently were "reporting

to Administrative Services Assistant 5." The State Department of Personnel

approved Mr. Manning's request by a letter dated March 10, 1994 which stated that

the approval was "based upon the information [TDVA] staff provided that these

positions, which had previously reported to an [sic] Commissioner, now report to the

Director of Administrative Services (Administrative [S]ervices Assistant 5)."

With a change of administration, Fred Tucker became the Commissioner

of the TDVA on January 21, 1995. On February 9, 1995, Mr. Tucker wrote a letter

requesting that the classification of three positions including Mr. Armstrong's be

changed to executive status as "the reporting relationship of these three positions has

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been changed to report directly to me." On February 22, 1995, Tennessee

Department of Personnel Commissioner, Susan Williams, reclassified Mr. Armstrong's

position from career service to executive service status. Only two days following the

reclassification of Mr. Armstrong's position, on February 24, 1995, Mr. Tucker

terminated Mr. Armstrong from this position.

In a letter dated March 15, 1995, Mr. Tucker denied Mr. Armstrong's

request for a grievance hearing stating that the procedures granting employees the

right to grieve apply only to employees in career services. Mr. Armstrong then

obtained counsel and requested a Level V hearing before the Commission in a letter

dated April 11, 1995. On April 27, 1995, Ms. Williams, as secretary of the

Commission sent Mr. Armstrong a letter stating that because he "was an employee

occupying an executive service position [under Tenn. Code Ann. § 8-30-208(b)(5)],

the [Commission] lack[ed] statutory authority to hear his grievance concerning his

dismissal." Mr. Armstrong then filed this petition in Chancery Court claiming that the

reclassification of his job and subsequent termination from this job divested him of a

constitutionally protected property right and thereby deprived him of due process.

II.

The facts of this case must be viewed with an understanding of the

Tennessee Civil Service Code which divides all positions in the state service between

career service and executive service. Tenn. Code Ann § 8-30-208 (1993); see also

§ 8-30-101(a)(23) (Supp. 1996) (defining "[s]tate service" as "all officers and positions

of trust or employment in the service of state government in the executive branch and

all boards, commissions and agencies in state government" with certain exceptions).

Generally speaking, executive service employees are those in higher level

management and administrative positions. Id. § 8-30-208(b); see also Op. Att'y Gen.

95-088 (Tenn. 1995). Among those positions designated for executive service are

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specific positions fully defined by the titles of the positions such as "[m]embers of

boards, commissions, agencies and authorities and the chief executive officer of each

board, commission, agency and authority and the commissioner of each department."

Tenn. Code Ann. § 8-30-208(b)(1). The executive service also includes positions

which are not defined by the particular job's title but by the job's description. An

example is the category of executive service into which the appellee's position was

classified which includes "[a]ny position serving in a confidential administrative or

program management capacity to a commissioner, deputy commissioner, assistant

commissioner or equivalent authority." Id. § 8-30-208(b)(5). All regular full-time

positions in state service which are not designated as executive service in Section

8-30-208(b) are in the career service. Id. § 8-30-208(c).

Career service employees who have completed their initial working test

periods are called "regular employees" and they are given certain protections under

the Civil Service Code. See id. § 8-30-101(a)(20) (Supp. 1996) (defining "regular

employee"). Section 8-30-328 sets up a grievance procedure for regular employees.

Moreover, while executive service employees serve at the pleasure of their employer,

Tenn. Dep't of Personnel R. § 1120-10-.02, a regular employee in the career service

acquires a property right in that position. Tenn. Code Ann. § 8-30-331(a) (1993).

With such a right, "no suspension, demotion, dismissal or any other action which

deprives a regular employee of such employee's property right will become effective

until minimum due process is provided." Id. § 8-30-331(a). The statute provides that

minimum due process includes written notice of the charges and the opportunity to

respond to these charges before any action is taken. Id. § 8-30-331(b)(1)-(2). The

statute states that the employee's opportunity to respond "shall be for the purpose of

allowing the employee to present information to the manager regarding the

disciplinary action under consideration." Id. § 8-30-331(b)(4).

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In this case the trial court based its decision on the Tennessee

Department of Personnel Rules on Disciplinary Actions which contain similar language

to the code with respect to minimum due process. Rule 1120-10-.03(1) states that

"[c]areer employees have a 'property right' to a position in the classification in which

they currently hold career status. Therefore, no suspension, demotion, dismissal or

any other action which deprives a regular (career) employee of his property right will

become effective until minimum due process is provided as outlined below." Like

Section 8-30-331(b) of the Tennessee Code, the Department rules provide that

minimum due process mandates written notification to the employee of the charges

against him as well as the opportunity for the employee to answer these charges and

present information which might influence the decision. Tenn. Dep't of Personnel R.

1120-10-.03(2). See Tenn. Code Ann. § 8-30-205 (1993) (providing that the rules

adopted by the commissioner to carry out the provisions of the civil service code "shall

have the force and effect of law").

III.

The Fourteenth Amendment to the United States Constitution protects

individuals against government deprivations of "life, liberty or property without due

process of law." U.S. Const. amend. XIV, § 1. In a due process case, the court

follows an established two-step analyses determining whether the plaintiff was

deprived of a protected interest and, if so, what process is due. Rowe v. Board of

Educ. of Chattanooga, 938 S.W.2d 351, 354 (Tenn. 1996), cert. denied, 117 S. Ct.

1271 (1997) (citing Board of Regents of State Colleges v. Roth, 408 U.S. 564, 569-70,

92 S. Ct. 2701, 2705, 33 L. Ed. 2d 548 (1972)). The case before us focusses on the

first question, specifically whether Mr. Armstrong had a constitutionally protected

property interest in his job giving rise to due process protection.

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"Property interests are not created by the federal constitution. Instead,

they are created and defined 'by existing rules or understandings that stem from an

independent source such as state law.'" Rowe, 938 S.W.2d at 354 (citing Roth, 408

U.S. at 577, 92 S. Ct. at 2709). The United States Supreme Court has stated that

"[t]he hallmark of property . . . is an individual entitlement grounded in state law, which

cannot be removed except 'for cause.'" Logan v. Zimmerman Brush Co., 455 U.S.

422, 430, 102 S. Ct. 1148, 1155, 71 L. Ed. 2d 265 (1982). As stated above,

Tennessee law gives certain civil service employees a constitutionally protected

property interest in continued employment which cannot be extinguished unless the

employees are afforded procedural due process. See Tenn. Code Ann. § 8-30-331

(1993); Tenn. Dep't of Personnel R.1120-10-.03(1).

It is not disputed that once Mr. Armstrong became a career employee in March

of 1994, he satisfactorily completed his initial probationary period under the

administration of the former Commissioner of TDVA, and thus became a regular

employee with a property interest in his employment. See Tenn. Code Ann. § 8-30-

331; § 8-30-312 (provides for probationary period of at least 3 months). As a regular

employee, the law clearly provides that Mr. Armstrong could not be deprived of his

property right by "suspension, demotion, dismissal or any other action" without

minimum due process. Id. § 8-30-331(emphasis added). The question becomes

whether the reclassification from career to executive service constitutes "any other

action" thereby triggering the minimum due process protections of Section 8-30-331.

The lower court answered this question in the affirmative observing that the language

"any other action" is exceedingly broad. We agree. Reclassification of an employee

from the career service to the executive service is just as much a deprivation of

property as suspension, demotion, or dismissal. Indeed, as Mr. Armstrong's case

illustrates, reclassification might immediately precede termination and thereby provide

the state with a means of effecting suspension, demotion, or dismissal without the

burden of providing due process.

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Moreover, with no means to review the reclassification of executive

service employees, the state can arbitrarily determine which employees will lose their

protected civil service status. As the trial court noted, it "requires the exercise of

some discretion to decide whether a state employee falls within" the category of

executive service (Tenn. Code Ann. § 8-30-29(5)) into which Mr. Armstrong was

classified. "To hold [that reclassification does not trigger minimum due process] would

completely eliminate real civil service protection for many, if not most, career service

employees. The appointing authority, for whatever reason, political or otherwise,

could simply reclassify a position and terminate the employee." This court has

recognized that the due process clause was "intended to secure the individual from

the arbitrary exercise of the powers of government." Lee v. Ladd, 834 S.W.2d 323,

325 (Tenn. App. 1992) (quoting Daniels v. Williams, 474 U.S. 327, 331, 106 S. Ct.

662, 665, 88 L. Ed. 2d 662, 668 (1986)).

We recognize that in both the statute and the Department rule, the

process that is due is articulated in the context of disciplinary procedures against an

employee. Though "suspension, demotion, dismissal or any other action which

deprives a regular employee of such employee's 'property right'" might occur most

often as a consequence of disciplinary procedures, the statute does not require that

the employee's loss be the result of discipline. Tenn. Code Ann. § 8-30-331(a).

Rather, the statute clearly creates a property right without qualification to all

"'[e]mployees who have successfully completed their probationary period" and

ensures due process for "any . . . action" which deprives them of their property

interest. Id.

In holding that the reclassification of an employee's position from career

service to executive service requires that the employee receive notice and the

opportunity to respond, we acknowledge that the legislature has given the

Commissioner of the Tennessee Department of Personnel the duty to assign the

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positions in the state service which are not specifically identified as career or

executive service. Tenn. Code Ann. § 8-30-208(d). The statute provides that "[s]uch

determination shall be based solely on duties, responsibilities and reporting

relationships and shall not be subject to review through any procedure." Id.

(emphasis added). To the extent that this statute cannot be reconciled with the state-

created property interest in employment possessed by a Tennessee career service

employee, we find that it is inadequate as a matter of constitutional law. In addressing

the nature of constitutional due process, the United States Supreme Court stated that

because "'minimum [procedural] requirements [are] a matter of federal law, they are

not diminished by the fact that the State may have specified its own procedures that

it may deem adequate for determining the preconditions to adverse official action'. .

. . Indeed, any other conclusion would allow the State to destroy at will virtually any

state-created property interest." Logan v. Zimmerman Brush Co., 455 U.S. 422, 102

S. Ct. 1148, 71 L. Ed. 2d 265 (1982) (quoting Vitek v. Jones, 445 U.S. 480, 491, 100

S. Ct. 1254, 1263, 63 L. Ed. 2d 552 (1980)).

The holding in Logan is instructive. There, the state of Illinois had

established a comprehensive scheme for adjudicating allegations of employment

discrimination. Logan, 455 U.S. at 422. After being discharged from the defendant

employer, the plaintiff filed a charge with the Illinois Fair Employment Practices

Commission which triggered the Commission's statutory obligation to convene a fact-

finding conference within 120 days. Id. at 426. However, by no fault of the plaintiff's,

the Commission's representative scheduled the conference for a date five days after

the expiration of the statutory period. Id. Finding the legislative language with regard

to scheduling a conference within 120 days to be mandatory, the state supreme court

held that the failure to comply with this language deprived the Commission of

jurisdiction to hear the plaintiff's charge. Id. at 427. In a decision which reversed the

state court, the Supreme Court asserted that "'[w]hile the legislature may elect not to

confer a property interest, . . . it may not constitutionally authorize the deprivation of

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such an interest, once conferred, without appropriate procedural safeguards.'" Id. at

432 (quoting Vitek, 445 U.S. at 490-91, n.6, 100 S. Ct. at 1262-62, n.6) (quoting Arnett

v. Kennedy, 416 U.S. 134, 167, 94 S. Ct. 1633, 1650, 40 L. Ed. 2d 15 (1974)). Thus,

while the General Assembly of Tennessee can completely do away with the

constitutionally-protected interest in continued employment for the state's civil service

regular employees, it cannot establish a system where these employees can be

arbitrarily deprived of their interest by reclassification without due process protection.

We hold that Mr. Armstrong, as a regular employee with a property

interest in his position, had a right to procedural due process upon the reclassification

of his position to executive service. In addition, he was entitled to use the grievance

procedures established by the legislature for regular employees. Tenn. Code Ann.

§ 8-30-328 (1993) (grievance procedures); § 8-30-331(c) (stating that "[t]he

commission shall determine as a preliminary matter to the merits of a grievance, a

grievant's allegation of denial of minimum due process"). We stress that it is the

reclassification of a career service employee to executive service that requires due

process and not the termination of an executive service employee, for the law

explicitly provides that executive service employees serve at the pleasure of their

employers. The nature of Mr. Armstrong's grievance or complaint must be that his

position has been wrongly assigned to the executive service. If it is ultimately

determined that Mr. Armstrong's duties correspond to those of an executive employee

as outlined in Section 8-30-29 and that his reassignment was proper, then he will

loose his property right in his position. If, on the other hand, it is determined that his

duties do not place him within the scope of executive service, he is entitled "to be

reinstated or made whole or both" pursuant to Section 8-30-328(e).

Lastly, we address appellant's contention that there is no legal

foundation for this appeal. Appellant claims that this was not a "contested case"

within the chancery court's review authority under the Uniform Administrative

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Procedures Act ("UAPA") which provides that "[a] person who is aggrieved by a final

decision in a contested case is entitled to judicial review under this chapter." Tenn.

Code Ann. § 4-5-322(a) (Supp. 1996). As stated, with regard to the UAPA, the trial

court concluded "that the decision not to hold a contested case hearing is subject to

judicial review just as if a contested case hearing were held." The court reasoned that

"[j]udicial review would be meaningless if it could be avoided by simply refusing to

hold a contested case hearing. More importantly, if a party has a right to a contested

case hearing and is denied one, precluding judicial review of the denial would leave

the party with no judicial redress of an obvious violation of the party's right to a

hearing."

In support of its contention that the UAPA is inapplicable, appellant relies

upon Mid-South Indoor Horse Racing, Inc. v. Tennessee State Racing Comm'n, 798

S.W.2d 531 (Tenn. App. 1990), which involved the issue of the UAPA's applicability

to the review of licensing proceedings in which the plaintiff was denied a license to

conduct horse racing. In Mid-South, this court stated that such proceedings "will be

treated as 'contested cases' only if they contain three essential elements. They must

be a 'proceeding' conducted by an 'agency' after the opportunity for a 'hearing.' . . .

Proceedings lacking any of these ingredients are not contested cases." Id. at 537.

In the case before us, the appellant asserts that since the Commission did not

conduct a proceeding after the opportunity for a hearing, there was no "contested

case" as is required by the statute for judicial review.

The problem with appellant's argument is that the Mid-South case did

not turn on the fact that there was no proceeding after the opportunity for a hearing

but rather on the fact that no such proceeding was required. The court stated "the

licensing proceeding involved in this case was not a contested case because the

commission was not required to afford Mid-South a hearing before acting on its

application." Id. at 537 (emphasis added). Significantly, the UAPA defines "contested

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case" as "a proceeding, including a declaratory proceeding, in which the legal rights,

duties or privileges of a party are required by any statute or constitutional

provision to be determined by an agency after an opportunity for a hearing." Tenn.

Code Ann. § 4-5-102(3) (1991) (emphasis added). In Mid-South, the court found that

state law did not contain a contested case hearing requirement nor was there one

arising from a constitutionally protected property interest in a racing license.

Mid-South, 798 S.W.2d at 539-40. On the other hand, in the case at bar, we have

concluded that due process requires that a regular employee with a property interest

in his position receive the hearing and proceedings upon the reclassification of his

position to executive service. Since there is a contested case hearing requirement,

we affirm the chancery court in its determination that this was a proper matter for

review under the UAPA.

For the foregoing reasons, the decision of the chancery court is affirmed

in all respects. As a regular employee with a property interest in his position under

Tennessee's Civil Service Code, Mr. Armstrong had a right to procedural due process

when his position was reclassified to executive service. We direct that he be allowed

to use the grievance procedures established by the legislature to raise his complaint

regarding the reassignment of his position. Finally, we affirm the chancery court's

decision to review Mr. Armstrong's petition under the UAPA. The costs on appeal

should be taxed to the state.

________________________________

BEN H. CANTRELL, JUDGE

CONCUR:

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_______________________________

HENRY F. TODD, PRESIDING JUDGE

MIDDLE SECTION

_______________________________

DAVID H. WELLES, JUDGE

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