Petition for Writ of Certiorari — Board of School Trustees of Madison Consolidated Schools, et al., Petitioners v. Joseph R. Elliott

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Appendix A

In the

United States Court of Appeals

For the Seventh Circuit

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No. 16-4168

JOSEPH R. ELLIOTT,

Plaintiff-Appellee,

v.

BOARD OF SCHOOL

TRUSTEES OF MADISON

CONSOLIDATED SCHOOLS,

Defendant-Appellant.

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Appeal from the United States District Court for the

Southern District of Indiana, Indianapolis Division.

No. 1:13-cv-319-WTL-DML — William T.

Lawrence, Judge.

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ARGUED SEPTEMBER 6, 2017 — DECIDED

DECEMBER 4, 2017

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Before BAUER, EASTERBROOK, and HAMILTON,

Circuit Judges.

HAMILTON, Circuit Judge. The Contract Clause of

the United States Constitution prohibits States from

passing laws “impairing the Obligation of Contracts.”

Art. I, § 10, cl. 1. The prohibition is not absolute, but

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it imposes substantial limits on laws that would

undermine existing contractual rights. In 2012, an

Indiana law took effect amending the State’s teacher

tenure law to cut back on the rights of tenured

teachers in layoffs. The issue in this appeal is

whether the new law violates the Contract Clause

rights of a teacher who had tenure before the law took

effect.

The Supreme Court of the United States held in

1938 that the Indiana teacher tenure statute created

contractual rights protected by the Contract Clause.

Indiana ex rel. Anderson v. Brand, 303 U.S. 95, 104,

58 S.Ct. 443, 82 L.Ed. 685 (1938). From 1927 to 2012,

that contract included job security when school

districts needed to reduce their teaching staffs: as

long as they were qualified for an available position,

tenured teachers had a right to be retained over nontenured teachers. The new Indiana law eliminates

that right and orders school districts to base layoff

choices on performance reviews without regard for

tenure status.

In 2012, defendant Board of Trustees for Madison

Consolidated Schools relied on the new law to lay off

plaintiff Joseph Elliott, a teacher who earned tenure

fourteen years before the new law took effect, while it

retained non-tenured teachers in positions for which

Elliott was qualified. Elliott sued, claiming that the

amendment violated the Constitution when applied to

him. The district court granted summary judgment

in Elliott’s favor. Elliott v. Board of School Trustees

of Madison Consol. Schools, 2015 WL 1125022 (S.D.

Ind. March 12, 2015). We affirm.

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I. Legal and Factual Background

A. Indiana’s Teacher Tenure Law

Indiana enacted its teacher tenure law as the Act

of March 8, 1927, Laws of the State of Indiana 259–

62 (1927) (“the Act”). The Act established how and

when a teacher earns tenure, the “principal purpose”

of which is “to secure permanency in the teaching

force.” Watson v. Burnett, 216 Ind. 216, 23 N.E.2d

420, 423 (1939). Permanency was intended to

promote “the public good through the creation of a

competent cadre of teachers in the state.” Stewart v.

Fort Wayne Community Schools, 564 N.E.2d 274, 278

(Ind. 1990). With the enactment, Indiana joined a

national trend in the early twentieth century of

offering job security to attract better teachers.

Unlike tenure statutes in many other States,

Indiana’s law has been treated as forming “an

employment by contract between the teacher and the

school corporation.” School City of Elwood v. State ex

rel. Griffin, 203 Ind. 626, 180 N.E. 471, 474 (1932); see

also Anderson, 303 U.S. at 107, 58 S.Ct. 443

(distinguishing Indiana law from other States’ laws).

A teacher who had “serve[d] under contract as a

teacher in any school corporation in the State of

Indiana for five or more successive years” achieved

tenure upon entering a sixth successive one-year

contract. Ind. Code § 26-6967.1 (1927).1 Once

tenured, teachers have an “indefinite contract” that

entitles them to employment contracts each year

unless the employer has good cause to fire them. Id.;

1 The original Act referred to “permanent” teachers, but we

use the more common term “tenured.”

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Lost Creek School Township v. York, 215 Ind. 636, 21

N.E.2d 58, 64 (1939). The annual employment

contracts can adjust variable terms like salary, hours,

and the length of the school year, but they must

always comply with the Act. Lost Creek, 21 N.E.2d at

64. In case of a conflict, the indefinite contract terms

set by statute supersede the annual employment

contract. School City of Lafayette v. Highley, 213 Ind.

369, 12 N.E.2d 927, 930 (1938) (parties cannot

circumvent Act by relying on written contract).

The core terms of the Act limit the reasons and

procedures for firing or laying off tenured teachers.

To cancel a tenured teacher’s contract, a school must

provide written notice and, upon demand, a

comprehensive hearing before the school board. Ind.

Code § 20-28-7.5-2; Ind. Code § 26-6967.2 (1927).

Schools can fire tenured teachers only for

incompetence, insubordination, neglect of duty,

immorality, a justifiable decrease in the number of

teaching positions, or other good cause. Ind. Code

§ 20-28-7.5-1; Ind. Code § 6967.2 (1927). Recognizing

a possible loophole, Indiana courts have long held

under the Act that if a school district must reduce the

number of its teachers, the district must retain

qualified tenured teachers over non-tenured teachers.

Watson, 23 N.E.2d at 423.

B. Senate Bill 1

The job security provisions in Indiana’s tenure law

remained unchanged until 2011. Compare Ind. Code

§ 26-6967.1 (1927) with Ind. Code § 20-28-7-1 (2010);

and Ind. Code § 26-6967.2 (1927) with Ind. Code § 2028-7-2 (2010). In 2011, Indiana amended the Act

through Senate Bill 1, which took effect in 2012. As

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relevant here, Senate Bill 1 established a mandatory

teacher-evaluation regime and removed the

protection for tenured teachers in layoffs.2

Starting with the 2012–13 academic year, Senate

Bill 1 requires schools to implement annual teacherevaluation plans. Ind. Code § 20-28-11.5-4(a). Each

year, schools must assess their teachers based on

performance evaluations, “Objective measures of

student achievement and growth,” and “Rigorous

measures of effectiveness.” Ind. Code § 20-28-11.54(c). Schools must then assign each teacher a rating:

highly effective, effective, improvement necessary, or

ineffective. Ind. Code § 20-28-11.5-4(c)(4).

These annual evaluations affect teacher pay,

student placement, and—most relevant here—

selection of teachers for layoff during reductions in

force. Under Senate Bill 1, a school district may no

longer consider tenure status when reducing its

teaching staff. Schools laying off teachers must now

cancel teacher contracts “on the basis of performance

rather than seniority.” Ind. Code § 20-28-7.5-1(d). To

decide between teachers with the same performance

ratings, schools may consider other factors, including

experience, additional degrees or credit hours,

leadership roles, and the school’s academic needs.

Ind. Code §§ 20-28-7.5-1(d), 20-28-9-1.5(b).

Senate Bill 1 also changed the terminology from

“permanent teacher” to “established teacher.” Any difference

between the two labels is irrelevant here, so we continue to use

the general term “tenured.”

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C. Plaintiff's Employment History

Plaintiff Joseph Elliott taught at Dupont

Elementary School, part of Madison Consolidated

Schools, for nineteen years. In 1998, Elliott entered

his sixth successive contract with the school district

and became a tenured teacher under the Act. He

continued to teach at Dupont for fourteen more years.

As is the norm in Indiana, Elliott signed a series of

annual contracts, the last of which was for the 2011–

12 school year. In 2012, Elliott’s colleagues elected

him president of the local teachers union.

During Elliott's time at Dupont Elementary, the

school’s evaluation policy assessed teachers across

fourteen skills.

Elliott received ten of these

evaluations. In all but one, he received ratings of

“strength” or “satisfactory”—the two highest

ratings—in all fourteen skills. The exception was

2002, ten years before he was laid off, when he

received “needs improvement” in the three skills

related to “interpersonal relationships” and a

comment that he sometimes had “difficulty accepting,

graciously, a different point of view.” In a few more

recent evaluations, Elliott received critiques about his

interpersonal skills but always earned ratings of

satisfactory or above. Dupont evaluated Elliott for

the last time in 2012 and found him satisfactory or

better in all skills. Toward the end of the 2011–12

school year, Dupont’s principal reviewed the

evaluation and recommended Elliott for contract

renewal.

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D. Defendant’s 2012 Layoffs

In the summer of 2012, however, the Madison

school district faced declining enrollment and a

corresponding reduction in state funding. The district

decided to close two schools and to reduce its teaching

staff effective that fall. The district had recently

implemented a new retention policy that incorporated

Senate Bill 1. Since we are reviewing a grant of

summary judgment for plaintiff, we assume that the

district properly followed that policy (though Elliott

disputes the point). Elliott and five other teachers

were notified that the district was laying them off.

As Indiana law provided, Elliott demanded a

conference with the superintendent and then a full

hearing with the Board. After the hearing, the Board

made factual findings about Elliott. The findings in

2012 pointed to the 2002 evaluation that had rated

Elliott low in interpersonal-relationship skills. The

2012 findings also cited a few comments from

evaluators over the years suggesting that Elliott

could be more compassionate.

The Board also

concluded that Senate Bill 1 allowed the district to

cancel Elliott’s contract during a justifiable reduction

in force.

The Board ordered Elliott’s contract

cancelled as of the end of the 2011–12 school year.

The school district retained six non-tenured teachers

in positions that Elliott was licensed to teach.

E. Procedural History

Elliott sued the school district in state court in

January 2013 alleging four state-law claims: (1) that

Senate Bill 1 violated the Indiana Constitution; (2)

that the district applied Senate Bill 1 before its

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effective date; (3) that the district applied Senate Bill

1 incorrectly; and (4) that his layoff was not supported

by sufficient evidence. He also alleged that Senate

Bill 1 impaired his contractual rights in violation of

the United States Constitution. The Board removed

the case to the federal district court, and the State of

Indiana later intervened to defend the new law’s

constitutionality. See 28 U.S.C. § 2403(b). The

parties filed cross-motions for summary judgment,

and the district court ruled in favor of Elliott.

The district court concluded that the layoff

provisions of Senate Bill 1 violate the Contract Clause

when applied retroactively to a teacher like Elliott

who earned tenure before the new law took effect.

Applying Supreme Court and Indiana precedent,

Judge Lawrence concluded that tenured Indiana

teachers have contractual rights to be retained over

non-tenured teachers in a reduction in force. He then

found that Senate Bill 1 “completely destroyed” this

right and was a substantial impairment under the

Contract Clause. Finally, he rejected the argument

that

this

impairment

was

constitutionally

permissible as a reasonable and necessary exercise of

the State’s power.

The State and the Board sought permission to take

an interlocutory appeal under 28 U.S.C. § 1292(b).

The district court granted permission but we did not.

The district court then entered final judgment for

Elliott and awarded him back pay under 42 U.S.C.

§ 1983 and attorney fees under 42 U.S.C. § 1988.

Although the district court based its final judgment

only on Elliott’s federal-law theory and not his statelaw theories, Elliott received the full relief that his

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state-law theories could have provided, so nothing

more needed to be decided. The State and the Board

appealed the final judgment.

II. Analysis

The issue is whether the district court correctly

decided that the layoff provisions of Senate Bill 1

violate the Contract Clause when applied

retroactively to a teacher who earned tenure before

the new statute took effect. We review the district

court’s decision de novo. Daniels v. Area Plan Comm’n

of Allen County, 306 F.3d 445, 458 (7th Cir. 2002)

(reviewing de novo a summary judgment order that

declared a state law unconstitutional).

At the outset, we note but bypass a potentially

difficult issue. Elliott sought, and the district court

awarded, damages under 42 U.S.C. § 1983. In Carter

v. Greenhow, 114 U.S. 317, 5 S.Ct. 928, 29 L.Ed. 202

(1885), the Supreme Court found that there was no

federal question jurisdiction over the plaintiff’s

Contract Clause claim. Using a predecessor of § 1983,

the plaintiff challenged a state law that affected his

state-issued bonds by prohibiting him from using his

coupons to pay his property taxes. Id. at 321–23, 5

S.Ct. 928. Some courts have read Carter broadly as

prohibiting any Contract Clause claims under § 1983.

See Kaminski v. Coulter, 865 F.3d 339, 347 (6th Cir.

2017); Crosby v. City of Gastonia, 635 F.3d 634, 640

(4th Cir. 2011). But Supreme Court and other

opinions reflect another view, reading Carter as based

more narrowly on the way the particular claim in that

case was pled and the failure to satisfy the amountin-controversy requirement applicable at the time.

See Dennis v. Higgins, 498 U.S. 439, 451 n.9, 111 S.Ct.

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865, 112 L.Ed.2d 969 (1991), quoting Chapman v.

Houston Welfare Rights Org., 441 U.S. 600, 613 n.29,

99 S.Ct. 1905, 60 L.Ed.2d 508 (1979); Southern

California Gas Co. v. City of Santa Ana, 336 F.3d 885,

886–87 (9th Cir. 2003) (per curiam); see also White v.

Greenhow, 114 U.S. 307, 307–08, 5 S.Ct. 923, 29 L.Ed.

199 (1885) (allowing claim for damages for violation

of Contract Clause in companion case to Carter);

Kaminski, 865 F.3d at 350 (Moore, J., dissenting)

(arguing for limited scope of Carter). We need not

take sides on this question. It does not affect our

subject matter jurisdiction, and the defendants have

waived this potential defense. They did not raise it in

the district court, and the State told us at argument

that the defendants do not rely on Carter.

Turning to the merits, the Contract Clause

prohibits States from passing any “Law impairing the

Obligation of Contracts,” U.S. Const. art. I, § 10, cl. 1,

but not all laws affecting contracts are

unconstitutional. The Contract Clause prohibits

changes in law only if they operate “as a substantial

impairment of a contractual relationship.” General

Motors Corp. v. Romein, 503 U.S. 181, 186, 112 S.Ct.

1105, 117 L.Ed.2d 328 (1992), quoting Allied

Structural Steel Co. v. Spannaus, 438 U.S. 234, 244,

98 S.Ct. 2716, 57 L.Ed.2d 727 (1978). This standard

balances individual rights to organize personal affairs

against the States' “necessarily reserved” sovereign

power to protect the general welfare. United States

Trust Co. of New York v. New Jersey, 431 U.S. 1, 21,

97 S.Ct. 1505, 52 L.Ed.2d 92 (1977). The Supreme

Court has harmonized these interests by applying a

two-step analysis, asking first whether a change in

state law has substantially impaired a contractual

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relationship, Energy Reserves Group v. Kansas Power

& Light Co., 459 U.S. 400, 411, 103 S.Ct. 697, 74

L.Ed.2d 569 (1983), and second whether the

impairment is reasonable and necessary for a

legitimate public purpose. United States Trust, 431

U.S. at 25, 97 S.Ct. 1505; Allied Structural Steel, 438

U.S. at 247, 98 S.Ct. 2716.

A. Substantial Impairment of Contractual

Rights?

We consider first whether applying Senate Bill 1

to Elliott substantially impaired his tenure contract.

This issue itself can be divided into three parts: (1)

whether there is a contractual relationship; (2)

whether a change in law impairs that contract; and

(3) whether the impairment is substantial. General

Motors, 503 U.S. at 186, 112 S.Ct. 1105.

1. The Contractual Relationship

Statutes typically create regulatory rights not

subject to the Contract Clause. See, e.g., Phelps v.

Board of Education of West New York, 300 U.S. 319,

323, 57 S.Ct. 483, 81 L.Ed. 674 (1937) (New Jersey

tenure law did not create contract rights for teachers

protecting them from salary reductions during Great

Depression). But when a legislature uses contractual

language that induces public reliance, it can create an

enforceable contract, as the Supreme Court held

Indiana’s teacher tenure law did. Indiana ex rel.

Anderson v. Brand, 303 U.S. 95, 100, 105, 58 S.Ct.

443, 82 L.Ed. 685 (1938). The defendants do not

dispute this general point, but they dispute the scope

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of the contractual relationship and the obligations it

imposes on the State and school districts.3

2. Impairment of Contractual Rights

The scope of the contractual obligations

determines whether Senate Bill 1 impairs any

contractual right.

The State makes two main

arguments on this point. First, it argues that the

Act’s job-security provisions are not part of the tenure

contract but are variable terms that annual teaching

contracts can change.

See Def. Br. at 23–24.

Therefore, goes the argument, amendments to the

job-security terms cannot violate the Contract Clause.

Second, the State argues that even if job security is

part of the tenure contract, the Act has protected

teachers only against dismissal without cause. Firing

teachers based on performance is still firing for cause,

the State argues, so that Senate Bill 1 does not impair

any existing contractual right. We reject both of those

arguments, which essentially try to rewrite Indiana

law and history.

The State makes much of the fact that a tenured

teacher works under two contracts, in effect: an

indefinite statutory one that provides tenure and an

annual one that governs variable terms like salary

and hours. Just as annual contracts can change

salary, the State argues, they can change the degree

3 The State does, however, ask us to treat Anderson as an

obsolete relic based arbitrarily on the particular language used

in the 1927 Act. That is not for us to say. And regardless of any

shift in how the Supreme Court might interpret the Contract

Clause today, generations of Indiana teachers have relied on

Anderson and the teacher tenure law it interpreted.

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of job security that tenure provides without violating

the Contract Clause. But Anderson and the Act itself

squarely block this argument. In Anderson, a teacher

challenged an amendment to the Act that eliminated

job security for teachers in township schools. 303 U.S.

at 97–98, 58 S.Ct. 443. Anderson considered “the

existence and nature” of the Indiana teacher tenure

law and found that it created a “binding and

enforceable contract against school districts.” Id. at

100, 105, 58 S.Ct. 443. The Supreme Court ultimately

determined that the statutory amendment impaired

the tenure contract when it changed the “admissible

grounds of cancellation” by revoking the State’s

statutory promise to tenured township teachers. Id.

at 105, 58 S.Ct. 443. If the grounds of cancellation

were subject to change through annual teaching

contracts, the Court in Anderson could not have

concluded that repealing job-security provisions

impaired the tenure contract. The Act—not the

annual contracts—granted Elliott his contractual

tenure rights. Under Anderson, these rights became

enforceable the year Elliott earned tenure.

A

decrease in job security necessarily impairs his rights

under that contract.

It is also well established under Indiana law that

the Act protects against more than at-will

termination. As noted, the Act allows schools to

dismiss a tenured teacher during a “justifiable

decrease in the number of teaching positions,” Ind.

Code § 26-6967.2 (1927), without much qualification.

But early on, the Indiana courts concluded that

reducing teaching staff does not permit schools to lay

off whichever teachers they please. In Watson v.

Burnett, 216 Ind. 216, 23 N.E.2d 420, 423 (1939), a

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school district laid off a tenured teacher who was

qualified to teach positions that non-tenured teachers

continued to teach. When challenged, the school

district relied on its authority to fire tenured teachers

when reducing teaching staff. The Indiana Supreme

Court held that the Act did not permit this result,

reasoning that if “a justifiable decrease in the number

of teaching positions should be held to give the

[district] the power to choose between tenure and nontenure teachers,” then the district would have “the

power to nullify the Teachers’ Tenure Act.” Id. This

holding answers our question directly: before Senate

Bill 1, the Act granted a qualified tenured teacher an

enforceable contractual right to be retained over nontenured teachers during a reduction in force.

From the enactment of the Act in 1927, Indiana

teachers thus benefitted from enforceable contractual

rights when they became tenured. These contractual

rights included job security rights in a layoff. Senate

Bill 1, when applied retroactively to a teacher like

Elliott who earned tenure before 2012, impairs those

job security rights and the tenure contract. See

United States Trust, 431 U.S. at 19 n.17, 97 S.Ct. 1505

(law adjusting the “express terms of an agreement” is

more likely to be an unconstitutional impairment).

3. “Substantial” Impairment

Laws impairing contracts violate the Contract

Clause only if the impairment is substantial, though

substantial impairment does not require a complete

destruction of the contractual relationship. Energy

Reserves, 459 U.S. at 411, 103 S.Ct. 697. The issue is

whether the impairment disrupts reasonable

contractual expectations. Id. at 413–16, 103 S.Ct.

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697; Allied Structural Steel, 438 U.S. at 245, 98 S.Ct.

2716. The Supreme Court’s decisions under the

Contract Clause show that reliance interests are key

to this inquiry. The analysis must “reflect the high

value the Framers placed on the protection of private

contracts.” Allied Structural Steel, 438 U.S. at 245,

98 S.Ct. 2716. Contracts “enable individuals to order

their personal and business affairs,” and once

arranged, “those rights and obligations are binding

under the law, and the parties are entitled to rely on

them.” Id.

Based on our reading of the Court’s cases, we

break this inquiry into two questions. First, was the

impaired term a “central undertaking” of the bargain

such that it “substantially induced” teachers to enter

their contracts? See City of El Paso v. Simmons, 379

U.S. 497, 514, 85 S.Ct. 577, 13 L.Ed.2d 446 (1965).

Second, was the change in law foreseeable, meaning

that the risk of change was reflected in the original

contract? Energy Reserves, 459 U.S. at 413–16, 103

S.Ct. 697. Put another way, we ask whether this

change substantially disrupted teachers’ important

and reasonable reliance interests. Id.

a. Central Undertaking

Legislation causes a substantial impairment if it

alters a “central undertaking” of the contract that

“substantially induced” a party to enter the bargain.

Simmons, 379 U.S. at 514, 85 S.Ct. 577 (finding no

substantial impairment when it could not “seriously

be contended that the buyer was substantially

induced to enter into the[ ] contracts” on the basis of

the impaired term). In other words, an impairment is

substantial if it disrupts actual and important

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reliance interests. Here, the term at issue is narrow

but important. When Elliott decided to become a

tenured teacher, the State and school district

promised him a substantial degree of job security:

during a downsizing, Elliott’s job would be more

secure than that of a non-tenured teacher.

The promise of job security, especially during

layoffs, lies close to the core of teacher tenure. Having

job security, even in tough economic times, was a

central term to induce people to become teachers and

seek tenure in Indiana. It is a term with significant

value to teachers, who as a matter of economics have

traded higher salaries for the protections that tenure

offers over the course of a career. Teachers earn lower

salaries than similarly educated professionals. They

receive part of their compensation through other

benefits, including better job security, which includes

a reduced risk of termination during staff reductions.

This lower risk has material value and was a primary

consideration that teachers could rely upon when

seeking tenured employment.4

4 A recent report by the Economic Policy Institute found that

public school teachers in the United States earn 11% less on

average than similarly educated professionals. See Sylvia A.

Allegretto & Lawrence Mishel, “The Teacher Pay Gap is Wider

than Ever,” at 17–18 (2016), accessible at http://www.epi.org/

publication/the-teacher-pay-gap-is-wider-than-ever-teacherspay-continues-to-fall-further-behind-pay-of-comparableworkers/. This estimate takes into consideration non-wage

benefits such as pension, insurance, and paid leave, but not job

security. Id. at 14–17. A 2015 report by the Organisation for

Economic Cooperation and Development found that in the

United States, public school teachers earn 67% to 71% of the

salary of the average professional with similar education.

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An impairment is even more substantial when it

disrupts expectations “in an area where the element

of reliance was vital.” Allied Structural Steel, 438

U.S. at 246, 98 S.Ct. 2716. In that case, the Court

considered how severely a change in pension law

disrupted an employer’s expectations about pension

obligations. Id. at 246–47, 98 S.Ct. 2716. The Court

found this reliance particularly important. Here we

consider not an employer’s but employees’

expectations, yet the same reasoning applies. Just as

an employer relies on a stable pension regime to fund

its pension program properly, so too teachers rely on

a stable job-security scheme to plan their personal

and professional lives, their investments of time and

money, and their retirements.

Senate Bill 1

substantially

disrupted

tenured

teachers’

expectations about job security. It is not fair to

change the rules so substantially when it is too late

for the affected parties to change course. Tenured

teachers cannot have do-overs in their careers, either

to earn more money to make up for the lost job

security or to find better job security in another school

district or in another field entirely.

b. Foreseeability

There is a second requirement for the impairment

to be substantial:

the parties must not have

anticipated the change in law. We have said that the

“foreseeability of the [new] law when the original

contract was made” is of “great” and even

“controlling” importance. Chrysler Corp. v. Kolosso

Education at a Glance 2015: OECD Indicators at 442, accessible

at http://dx.doi.org/10.1787/eag-2015-en.

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Auto Sales, Inc., 148 F.3d 892, 894 (7th Cir. 1998). If

the parties anticipated a change in the law, then their

bargain would reflect the risk of a future impairment.

Id. at 894–95 (“[W]hat was foreseeable then will have

been taken into account in the negotiations over the

terms of the contract.”).

If the new law was

foreseeable, then reliance on the impaired terms may

have been unreasonable so that a disruption to the

relationship would not be deemed substantial.

The Supreme Court has found that a change in law

was foreseeable in at least two contexts. In the first,

the Court pointed to the history of “extensive and

intrusive” regulation in the affected industry. Energy

Reserves, 459 U.S. at 413–16, 103 S.Ct. 697 (new price

controls on natural gas did not disrupt the supplier’s

reasonable expectations when the industry was

heavily regulated and supplier “knew its contractual

rights were subject to alteration by state price

regulation”). In the second, the Court reasoned that

because the original law had only a temporary goal,

the parties must have anticipated a future legislative

change. Simmons, 379 U.S. at 516, 85 S.Ct. 577

(change in land-sale law did not impair contracts

when goal of law shifted from settlement of Texas

frontier to “efficient utilization of public lands”).

These contexts are quite different from teacher

tenure. One can anticipate that any state law may

change in the future, but retroactive application to

impair existing contract rights and reliance interests

is another question.

Retroactive application of

legislation like Senate Bill 1 was unforeseeable when

teachers like Elliott became tenured. Indiana has

historically regulated teacher compensation, but “a

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history of regulation is never a sufficient condition” by

itself. Chrysler Corp., 148 F.3d at 895. The question

is whether the nature of the regulation puts the party

“on notice that an entirely different scheme” would

likely be imposed.

Id.

Although Indiana has

regulated teacher tenure since 1927, the Supreme

Court held in 1938 that those regulations were

contractual, protected by the Contract Clause.

Anderson, 303 U.S. at 105, 58 S.Ct. 443. The State

did not materially amend those terms for more than

eighty years.

Senate Bill 1 was thus not a “small and predictable

step” in the evolution of the Act, see Chrysler Corp.,

148 F.3d at 895, at least as applied to already-tenured

teachers. For teachers who have built their entire

careers relying on those contractual rights as

protected in Anderson, Senate Bill 1 amounts to

unforeseeable backtracking by the State. This change

in the fundamental trade-off of job security for money

is not comparable to shifting pricing arrangements for

natural gas markets. Nor are attracting qualified

teachers and improving public education merely

temporary goals that Indiana no longer pursues.

Retroactive application of the layoff provisions of

Senate Bill 1 to already-tenured teachers is not a

foreseeable change that restricts “a party to those

gains reasonably to be expected from the contract.”

Simmons, 379 U.S. at 515, 85 S.Ct. 577.

Indiana itself created the binding obligation on

which tenured teachers have relied for decades—and

from which the State itself has benefitted. This is not

a case where private parties “whose rights . . . are

subject to state restriction” attempt to “remove”

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themselves “from the power of the State by making a

contract about them.” Blaisdell, 290 U.S. at 437–38,

54 S.Ct. 231.

Rather, Indiana established the

teachers’ contractual rights by statute. When a State

enters a binding commitment, the other party’s

reliance on that commitment is even more justified.

Energy Reserves, 459 U.S. at 412–13, 412 n.14, 103

S.Ct. 697. At any time after Anderson, Indiana could

have amended its teacher tenure law prospectively,

changing it from contractual to regulatory. Indiana

declined to do so. This retroactive change to tenure’s

job protections was not foreseeable. Applying the

layoff provisions of Senate Bill 1 substantially

impaired Elliott’s tenure contract rights by disrupting

his reasonable contractual expectations.

B. Reasonable and Necessary

Important Public Purpose?

to

Serve

Still, not even all substantial impairments of

contracts are unconstitutional. If the impairment is

both reasonable and necessary for an important

public purpose, then the law does not violate the

Contract Clause. United States Trust, 431 U.S. at 25,

97 S.Ct. 1505. Analyzing Senate Bill 1 within this

framework, we agree with the district court that the

amendment, though enacted for a legitimate and

important public purpose, is unconstitutional as

applied to an already-tenured teacher because it was

not necessary or reasonable.

As a preliminary matter, the parties disagree

about the extent of any deference we might owe the

state legislature’s policy decision to restrict tenure

rights. Courts owe at least some deference to

legislative determinations of reasonableness and

21a

necessity. United States Trust, 431 U.S. at 22–23, 97

S.Ct. 1505; East New York Savings Bank v. Hahn, 326

U.S. 230, 234, 66 S.Ct. 69, 90 L.Ed. 34 (1945). The

degree of deference differs depending on the severity

of the impairment and on the State’s self-interest.

Allied Structural Steel, 438 U.S. at 245, 98 S.Ct. 2716

(“The severity of the impairment measures the height

of the hurdle the state legislation must clear.”);

United States Trust, 431 U.S. at 25–26, 97 S.Ct. 1505

(“[C]omplete deference to a legislative assessment of

reasonableness and necessity is not appropriate

because the State’s self-interest is at stake.”).

The State argues that heightened scrutiny under

United States Trust applies only when a State itself

enters into a financial obligation and not when the

State exercises its police power. But that is not the

only context in which a State can have a self-interest.

“In almost every case, the Court has held a

governmental unit to its contractual obligations when

it enters financial or other markets.” Energy Reserves,

459 U.S. at 412 n.14, 103 S.Ct. 697 (emphasis added).

Also, self-interest is not the only justification for a

more searching review. When a State makes an

express commitment to private businesses or

individuals, reliance may be highly justified. Id.,

citing Note, A Process-Oriented Approach to the

Contract Clause, 89 Yale L. J. 1623, 1647–48 (1980).

The State therefore must have a substantial reason

for breaking its own promise. Id.

We do not owe complete deference to the state

legislature here. The impairment is substantial, the

contract is an express commitment between the State

and the teachers, and the State’s self-interest is at

22a

stake.

Under the Indiana Constitution, public

education is ultimately the State’s responsibility,

even if it delegates execution to local school districts.

See Ind. Const. art. 8, § 1. The State is thus not acting

solely as a market participant here, for teacher tenure

involves much more than impairment of “an isolated

private contract.” See East New York Savings Bank,

326 U.S. at 232, 66 S.Ct. 69 (deferring to legislative

decision that impaired private financial contract

following market collapse). The tenure contract has

been a public promise, and the job security provisions

are at the core of the economic bargain between the

State and the teachers of local school districts. We

need not scrutinize the legislature’s decision in great

detail to find it lacking, nor should we make the kind

of “utilitarian comparison between public benefit and

private loss” the Supreme Court has warned against.

United States Trust, 431 U.S. at 29, 97 S.Ct. 1505.

Complete deference is unwarranted, and review of the

impairment is appropriate.

The Supreme Court refined modern Contract

Clause jurisprudence in a series of challenges to state

laws during the “unprecedented emergencies” of the

Great Depression. Allied Structural Steel, 438 U.S. at

242, 98 S.Ct. 2716. Thus in Home Building & Loan

Ass’n v. Blaisdell, 290 U.S. 398, 54 S.Ct. 231, 78 L.Ed.

413 (1934), the Court upheld a Minnesota law that

temporarily suspended mortgage foreclosures. The

Court explained that an “emergency existed” that

“furnished a proper occasion for the exercise of the

reserved power of the State to protect the vital

interests of the community.” Id. at 444, 54 S.Ct. 231.

It compared the economic crisis to a “fire, flood, or

earthquake.” Id. at 439, 54 S.Ct. 231. An emergency

23a

is not a requirement for a State to impair contracts

but remains relevant to whether an impairment is

appropriate. United States Trust, 431 U.S. at 22 n.19,

97 S.Ct. 1505. With this context in mind, we assess

whether the State’s decision to impair contracts of

already-tenured teachers was reasonable and

necessary.

Improving teacher quality and public-education

outcomes are both important public interests of the

highest order. But even important goals and good

intentions do not justify this substantial impairment

of the tenure contract for already-tenured teachers.

See United States Trust, 431 U.S. at 21, 97 S.Ct. 1505

(“the existence of an important public interest is not

always sufficient to overcome [the Contract Clause’s]

limitation”). When a State impairs its own contracts,

the impairment must be “clearly necessary” or

“essential,” not merely convenient or expedient.

Simmons, 379 U.S. at 516, 85 S.Ct. 577 (upholding

law that impaired a contract between Texas and

purchasers of land when “clearly necessary” to

achieve an important public goal); United States

Trust, 431 U.S. at 29–30, 97 S.Ct. 1505 (invalidating

law that impaired contract between States and

bondholders when the impairment was not

“essential”).

A substantial impairment is not

necessary if the State could achieve the goal through

“a less drastic modification” or “without modifying”

the contract “at all.” Id.

Indiana has not shown it needs to impose this

retroactive impairment of its earlier promises of job

security to improve teacher quality. Senate Bill 1

does not change the State’s power to fire ineffective

24a

teachers. School districts have had that power before

and after 1927 to the present day. See Ind. Code § 266967.2 (1927); Anderson, 303 U.S. at 108, 58 S.Ct.

443. Instead, the impairing legislation requires

schools to consider small differences in performance

among teachers who are not ineffective. Here, the

Madison school district needed to lay off a handful of

teachers to save money. Shortly after deciding to

renew Elliott’s contract (and shortly after he was

elected president of the local teachers union), the

school district chose him for layoff. He had never been

found ineffective. If he had been, the school district

could have fired him without relying on Senate Bill 1.

Ten years ago, Elliott was found to need improvement

in one skill-set, and he apparently made that

improvement. That stale problem is the proffered

rationale for laying off him instead of a non-tenured

teacher.

Distinguishing between qualified and

effective teachers on such a meager basis is not

necessary to achieve Indiana’s goals, at least as

applied to teachers who earned tenure before Senate

Bill 1 took effect.

The Contract Clause does not saddle the State

forever with a teacher-tenure system that its

policymakers have come to think is bad for public

education. The Constitution does not prevent the

State from changing the promises it makes on a

prospective basis to new teachers. Also, if the State

were to conclude that retroactive changes to tenure

are necessary, the Contract Clause would give the

State the option (much like the Takings Clause) of

paying the individuals who would otherwise lose out

from the change. (After all, a party to a contract is

ordinarily free to breach the contract as long as it is

25a

willing to pay damages to the other party.) The State

can make the changes it wants, but it cannot foist the

costs onto private parties, other than through general

taxes. Having restricted tenure for new teachers, the

State and its school districts were and are free to buy

out the tenure rights of more senior ones.

Finally, the retroactive impairment is not

reasonable.

Contractual impairments can be

reasonable if either (1) the statute “had effects that

were unforeseen and unintended” when originally

adopted,

or

(2)

“subsequent

changes”

in

circumstances “caused the covenant to have a

substantially different impact” than anticipated.

United States Trust, 431 U.S. at 31–32, 97 S.Ct. 1505.

In trying to meet this standard, the State emphasizes

that public education is important and that teacher

quality improves student achievement. We agree on

the first point and have no reason to disagree on the

second, but these points were surely as true in 1927,

1957, and 1987 as they are now. In fact, creating “a

competent cadre of teachers” was the precise goal

when Indiana established teacher tenure. Stewart v.

Fort Wayne Community Schools, 564 N.E.2d 274, 278

(Ind. 1990). We see no changed circumstances that

impose “unforeseen ad-vantages or burdens” on the

parties. Simmons, 379 U.S. at 515, 85 S.Ct. 577.

The judgment of the district court is AFFIRMED.

26a

Appendix B

Filed 03/12/15

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF INDIANA

INDIANAPOLIS DIVISION

JOSEPH R. ELLIOTT

Plaintiff,

v.

BOARD OF SCHOOL TRUSTEES OF MADISON

CONSOLIDATED SCHOOLS,

Defendant.

Case No. 1:13-cv-319-WTL-DML

Entry on Cross-Motions for Summary

Judgment

Before the Court are three motions: the Plaintiff’s

motion for summary judgment (Dkt. No. 82); the

Defendant’s cross-motion for summary judgment

(Dkt. No. 56); and the Intervenor-Defendant’s motion

for summary judgment (Dkt. No. 59). The motions are

fully briefed, and the Court rules as follows.1

The Court commends counsel for their briefing on the

issues in this case. In light of the well-written and thorough

briefs, the Court does not believe oral argument is necessary.

Accordingly, the Plaintiff’s Motion Requesting Oral Argument

(Dkt. No. 83) is DENIED.

1

27a

I.

STANDARD

Federal Rule of Civil Procedure 56(a) provides that

summary judgment is appropriate “if the movant

shows that there is no genuine dispute as to any

material fact and the movant is entitled to judgment

as a matter of law.” In ruling on a motion for

summary judgment, the admissible evidence

presented by the non-moving party must be believed

and all reasonable inferences must be drawn in the

non-movant’s favor. Hemsworth v. Quotesmith.com,

Inc., 476 F.3d 487, 490 (7th Cir. 2007); Zerante v.

DeLuca, 555 F.3d 582, 584 (7th Cir. 2009) (“We view

the record in the light most favorable to the

nonmoving party and draw all reasonable inferences

in that party’s favor.”). However, “[a] party who bears

the burden of proof on a particular issue may not rest

on its pleadings, but must affirmatively demonstrate,

by specific factual allegations, that there is a genuine

issue of material fact that requires trial.” Id. Finally,

the non-moving party bears the burden of specifically

identifying the relevant evidence of record, and “the

court is not required to scour the record in search of

evidence to defeat a motion for summary judgment.”

Ritchie v. Glidden Co., 242 F.3d 713, 723 (7th Cir.

2001).

The fact that the parties have filed cross-motions

for summary judgment does not alter the standard set

forth in Federal Rule of Civil Procedure 56. When

evaluating each side’s motion, the Court simply

“construe[s] all inferences in favor of the party

against whom the motion under consideration is

made.” Metro Life. Ins. Co. v. Johnson, 297 F.3d 558,

28a

561-62 (7th Cir. 2002) (quoting Hendricks-Robinson v.

Excel Corp., 154 F.3d 685, 692 (7th Cir. 1998)).

II.

BACKGROUND

This case arises out of the termination of Plaintiff

Joseph Elliott, a tenured2 teacher, by Defendant

Board of School Trustees of Madison Consolidated

Schools (“the Board”). Before delving into the specific

facts of this case, a brief background of Indiana law

regarding teacher contracts is necessary.

In 1927, Indiana enacted the Teachers’ Tenure Act

(“the Act”), “the principal purpose of [which] was to

secure permanency in the teaching force.” Watson v.

Burnett, 23 N.E.2d 420, 423 (Ind. 1939); see State ex

rel. Anderson v. Brand, 5 N.E.2d 531, 532 (Ind. 1937),

rev’d on other grounds by State of Indiana ex rel.

Anderson v. Brand, 303 U.S. 95 (1938) (noting that

the purpose of the Act was “to promote good order and

the welfare of the state and of the school system by

preventing the removal of capable and experienced

teachers at the political or personal whim of changing

officeholders”). A key cog in the Act was the provision

for teacher tenure:

Any person who has served or who shall serve

under contract as a teacher in any school

corporation in the State of Indiana for five or more

successive years, and who shall hereafter enter

2 The Court understands that the statutes in Indiana refer

to “tenured” teachers as “permanent” or “established” teachers.

Like Mr. Elliott, however, the Court will use the term “tenure”

for the sake of clarity throughout this Entry, as it is the term

used by most courts. See Pl.’s Br. at 1, n. 1.

29a

into a teacher’s contract for further service with

such corporation, shall thereupon become a

permanent teacher of such school corporation. . . .

[S]uch contract shall be known as an indefinite

contract.

Dkt. No. 41-2, Act of Mar. 8, 1927, Laws of the State

of Indiana 259. The Act provided that an “indefinite

contract” could only be cancelled on grounds of

immorality, insubordination, neglect of duty,

incompetence, a justifiable decrease in the number of

teaching positions, a conviction, or for a good and just

cause. Dkt. No. 41-4, Ind. Code § 20-28-7-1(a)(1)-(7)

(2010).

Prior to 2011, in a reduction in force (“RIF”)

situation, the Act was interpreted to mandate the

retention of tenured teachers over non-tenured

teachers.

If a justifiable decrease in the number of teaching

positions should be held to give to the trustee the

power to choose between tenure [and] non-tenure

teachers, both of whom are licensed to teach in the

teaching position which remains, he is thereby

given the power to nullify the Teachers’ Tenure

Act, and to discharge without cause a teacher who

has, by reason of having served satisfactorily as a

teacher during the specified period, secured a

tenure status and an indefinite permanent

contract.

Watson, 23 N.E.2d at 423; see also Stewart v. Fort

Wayne Cmty. Sch., 564 N.E.2d 274, 278 (Ind. 1990)

(“Indiana Code § 20-6.1-4-10 and our decision in

Watson protect [the plaintiff] from being fired before

30a

non-tenured teachers due to a reduction in force only

as long as her qualifications make her eligible for the

job she seeks.”). From 1927 through 2010, the Act

remained substantively unchanged.

In 2011, however, Indiana embarked on a series of

educational reforms. On April 30, 2011, legislation

known as SB 1 was signed into law, affecting the

employment, evaluation, and dismissal of Indiana

teachers.

Among some of the most significant

changes was the redesignation of “permanent”

teachers as “established” teachers. Ind. Code § 20-286-8(a). SB 1 also mandated, beginning in the 20122013 school year, annual performance evaluations for

all teachers, rating them in one of four categories:

highly effective; effective; improvement necessary; or

ineffective. Ind. Code § 20-28-11.5-4. In conducting

these evaluations, SB 1 requires that “[o]bjective

measures of student achievement and growth []

significantly inform the evaluation.” Ind. Code § 2028-11.5-4(c)(2). Further, under SB 1, teachers may be

deemed “incompetent”—and subject to dismissal—if

they receive an “ineffective” or “improvement

necessary” rating in any three years out of a five-year

period, or if they receive an “ineffective” rating for two

consecutive years. Ind. Code § 20-28-7.5-1(3)(4).

However, most relevant to the case at bar is SB 1’s

RIF provision: “After June 30, 2012, the cancellation

of teacher’s contracts due to a justifiable decrease in

the number of teaching positions [a RIF] shall be

determined on the basis of performance rather than

seniority.” Ind. Code § 20-28-7.5-1(d) (emphasis

added). Thus, under SB 1, a tenured teacher rated as

“ineffective” or “improvement necessary” cannot be

31a

retained over a non-tenured teacher rated as

“effective” or “highly effective” during a RIF. If

teachers are placed in the same performance

category, the following criteria may be considered:

the number of years of a teacher’s experience; if the

teacher has additional content area degrees beyond

the requirements for employment; the assignment of

instructional leadership roles to the teacher; and the

academic needs of students in the school corporation.

Id.; Ind. Code § 20-28-9-1.5(b).

With this background in mind, the Court turns to

the specific facts of this case, which are undisputed.

Plaintiff Joseph Elliott is a licensed teacher in the

state of Indiana and certified to teach kindergarten

and general elementary education. He also has an

elementary administrator’s license. On August 24,

1993, Mr. Elliott was hired by the Board to teach at

Dupont Elementary School. In August 1998, Elliott

entered into his sixth successive contract with the

Board, making him a permanent teacher with an

indefinite contract under then-Indiana law, i.e., a

tenured teacher. Mr. Elliott remained employed with

the Board for fourteen more years.

Mr. Elliott received ten written evaluations during

his nineteen years as an employee of the Board. See

Dkt. Nos. 41-8 thought 41-17. Mr. Elliott primarily

received ratings of “strength” and “satisfactory” in all

categories; however, in 2002, he received “needs

improvement” ratings in the “interpersonal

relationship” category from his then-principal, Karla

Gauger. Dkt. No. 41- 13. This category including the

following: demonstrates effective interpersonal

relationships with students; demonstrates effective

32a

interpersonal relationships with others; and promotes

positive self-concept of students.

Ms. Gauger

explained that Mr. Elliott “is very dedicated to

education . . . At times, however, he has difficulty

accepting, graciously, a different point of view.” Mr.

Elliott received ratings of “strength” and

“satisfactory” in all categories in 2012, his final

evaluation before his termination. See Dkt. No. 4117.

In 2012, Madison Consolidated Schools (“MCS”)

was forced to reduce its workforce due to enrollment

decline and financial struggles; two elementary school

buildings, including Dupont Elementary School, were

also being closed. In deciding which individuals’

contracts should be cancelled, MCS followed its RIF

Policy which provided, in pertinent part, the

following:

The purpose of this policy is to establish a

procedure for reduction of licensed teachers due to

a justifiable decrease in the number of teaching

positions in the school system. When a reduction

in force is determined to be needed under this

policy, the provisions of I.C. 20-28-7.5 will be

followed regardless of past practice.

...

The primary consideration in any reduction in

force will be the maintenance of a sound and

balanced educational program that is consistent

with the functions and responsibilities of the

school system. The following factors will be

considered in determining which employees shall

be included in the reduction in force:

33a

1. Work performance;

2. Length of service in the school system;

3. Service in extra duty positions and ability to

fill such positions;

4. Other beneficial services provided to the

school system; and

5. Recommendations and advice from the

Superintendent,

the

Superintendent’s

Designee(s) and principals.

Among the above factors, primary consideration

will be given to factors (1) and (5). In assessing an

employee’s work performance for purposes of this

policy, the school system may consider

performance evaluations, improvement plans,

past disciplinary actions, and other relevant

factors as determined by the Superintendent.

Dkt. No. 41-25, MCS Policy 6.20. MCS principals had

several meetings to determine which teachers would

be recommended for contract cancellation; ultimately,

six teachers, including Mr. Elliott, were initially

selected.

On June 7, 2012, Dupont Elementary School

Principal Alvin Sonner sent a letter to Mr. Elliott

informing him that he had “made a preliminary

decision to decline to continue [Mr. Elliott’s] teaching

contract at the end of the 2011-2012 school year” due

to a “[j]ustifiable decrease in the number of teaching

positions.” Dkt. No. 41-6. After receiving the letter,

Mr. Elliott requested a private conference with

Interim Superintendent Steve Gookins in accordance

with Indiana Code § 20-28-7.5-2; this conference was

34a

held on June 11, 2012. Following this conference, Mr.

Gookins recommended to the Board that Mr. Elliott’s

contract be cancelled effective at the end of the 20112012 school year. Mr. Elliott also requested a

conference with the Board, which was held on August

2, 2012. At the conference, four members of the Board

were present. Both Mr. Elliott and MCS were

represented by legal counsel and had the opportunity

to present evidence.

On August 8, 2012, the Board held its regular

meeting. The following “Findings of Fact” were made

regarding Mr. Elliott:

25. Joe Elliot is sometimes too hard on students

and is too rigid. His classroom is sterile and his

students do not speak unless spoken to. This

creates a negative effect on education due to

the children’s fear of being ridiculed. There are

parents who insist that their students be

placed in other classrooms because of Mr.

Elliot’s rigidity.

26. Joe Elliott is moody. He creates turmoil, makes

sarcastic comments towards other people, and

is not respectful towards others at times. He

does not get along well with others and

sometimes gives certain teachers and

administrators the silent treatment.

27. A past evaluation indicated that Mr. Elliott

needed improvement in the following areas:

demonstrating

effective

interpersonal

relationships with students; demonstrating

effective personal relationships with others;

35a

and promoting

students.

positive

self-concept

of

28. A past evaluation suggested that Mr. Elliott

make improvements by being compassionate

and nurturing and by working on fostering

teamwork and comradery with all Dupont staff

members.

29. A past evaluation suggested that Mr. Elliot

make improvements by always demonstrating

compassion for students indicating that he was

not demonstrating appropriate compassion for

students.

30. A past evaluation noted that Mr. Elliott has, at

times, difficulty accepting graciously a

different point of view.

31. The Board saw no reason that the comments in

the evaluations referred to would have been

made if not true and accepted and found the

same to be true.

32. Mr. Elliott had difficulties working well with

at least one consultant.

33. Mr. Elliott coordinated the Spell Bowl program

for several years. Coaches involved in the

program had difficulty getting materials from

Mr. Elliott and Mr. Elliott would not meet with

the coaches as requested. When he was

relieved from the position, he disposed of

materials which had been developed for the

program. It was difficult to find a replacement

for Mr. Elliott because prospective teachers

were afraid of Mr. Elliott’s wrath.

36a

34. At various times, Mr. Elliott made comments

to at least 3 teachers which so upset the

teachers that they came to the principal and

cried.

35. Collegiality and collaboration are required for

a good school, and discourse among employees

has a negative effect on students. Future

ventures will require the staff to get along and

cooperate to reach goals.

36.

Principals who testified at the Board

conference were aware of the opinion that Mr.

Elliott would create poor morale in their

buildings and supported the recommendation

that his contract not be continued.

Dkt. No. 41-1, August 8, 2012, Board Minutes. It was

therefore ordered that “because of a justifiable

decrease in the number of teaching positions, the

indefinite teaching contract of Joseph Elliott is

cancelled effective the end of the 2011/2012 school

year.” Id. Six teachers who were not permanent

teachers with indefinite contracts, i.e. non-tenured

teachers, were retained in positions for which Mr.

Elliott was licensed. Dkt. No. 41-26.

Mr. Elliott filed suit in Jefferson County Superior

Court on January 23, 2013, and the Board removed

the suit to this Court on February 26, 2013.

III.

DISCUSSION

Mr. Elliott’s Amended Complaint sets forth five

counts against the Board. He alleges that as applied

to him, SB 1’s RIF provision is unconstitutional under

the Indiana and United States Constitutions, that the

37a

Board’s actions violated Indiana law, and that

substantial evidence does not support the Board’s

decision to cancel his teaching contract.

On

September 19, 2013, this Court granted the State of

Indiana’s motion to intervene to defend the

constitutionality of SB 1’s RIF provision. The Court

now turns to the present motions, beginning with the

parties’ arguments regarding Count One.

A.

The Constitutionality of SB 1

As noted above, Count One alleges that, as applied

to Mr. Elliot, SB 1’s RIF provision violates both the

United

States

and

Indiana

Constitutions.

Specifically, Mr. Elliott argues that it

violate[s] Article 1, § 24 of the Indiana

Constitution which provides that “No ex post facto

law, or law impairing the obligation of contracts

shall ever be passed” and Article 1, § 10 of the

United States Constitution which states in part

that, “No state shall . . . pass any bill of attainder,

ex post facto law, or law impairing the obligation

of contracts or grant any title of nobility.”

Dkt. No. 21, Amend. Compl. ¶ 13. Mr. Elliott, the

Board, and the State all agree on the relevant

analysis. To prove a violation of either the United

States or Indiana Constitutions, Mr. Elliott has to

demonstrate that the new law substantially impairs

his contractual rights. See Sweeney v. Pence, 767 F.3d

654, 667 (7th Cir. 2014) (“The relevant inquiry has

three components: 1) whether there is a contractual

relationship; 2) whether a change in law impairs that

contractual relationship; and 3) whether the

impairment is substantial.”). If so, the Court then

38a

determines if SB 1’s RIF provision was reasonable

and necessary to serve an important public interest.

See Chicago Bd. of Realtors, Inc. v. City of Chi., 819

F.2d 732, 736 (7th Cir. 1987) (“[W]e must inquire

whether the city has a significant and legitimate

public purpose justifying the Ordinance [and] . . .

whether the effect of the Ordinance on contracts is

reasonable and appropriate given the public purpose

behind the Ordinance.”) (citing Energy Reserves Grp.,

Inc. v. Kansas Power & Light Co., 459 U.S. 400, 41112 (1983)); Girl Scouts of S. Illinois v. Vincennes

Indiana Girls, Inc., 988 N.E.2d 250, 257 (Ind. 2013)

(“Legislation [that] invade[s] freedom of contract can

only be sustained . . . if it both relates to the claimed

objective and employs means which are both

reasonable and reasonably appropriate to secure such

objective.”). With this standard in mind, the Court

turns to the first step in the analysis.

1.

Contractual Rights

In Indiana, it is undisputed that teacher tenure is

a contractual right. Indeed, in 1938, the Supreme

Court, in interpreting the Act, noted that “[n]o more

apt language could be employed to define a

contractual relationship.” Brand, 303 U.S. at 105.

Since the Supreme Court held that tenured teachers

obtained contractual rights under the Act, Indiana

courts have recognized that “[a] permanent tenure

teacher’s indefinite contract is a protected contractual

right entitling the teacher to a succession of definite

contracts with terms meeting the requirements of the

pertinent statutes[.]” Lost Creek Sch. Twp., Vigo

Cnty. v. York, 21 N.E.2d 58, 64 (1939). This much is

clear.

39a

What the parties disagree on is what the contours

of that right are. Mr. Elliott argues that part of his

contractual right as a tenured teacher was the “right

in the event of a reduction in force to be retained

above non-tenured teachers for positions for which he

was certified.” Pl.’s Br. at 11. The Board and the

State disagree. They opt for a more limited view of

what contractual right Mr. Elliott obtained when he

achieved tenure: “the ‘concept of tenure’ does not at

its core refer to the right of [] tenured teachers to be

retained over [] non-tenured teachers in the event of

a reduction in force. Rather, it is more broadly

defined as the ‘right to continued employment by

virtue of the indefinite contract[.]’” State’s Resp. at 9.

Thus, the Board and the State argue that Mr. Elliott,

as a tenured teacher, simply had the contractual right

to continuous, definite contracts. And, based on York,

those

definite

contracts

incorporate

“the

requirements of the pertinent statutes,” i.e., SB 1’s

RIF provision. York, 21 N.E.2d at 64.

In the Court’s view, the State and the Board’s

arguments regarding the limited scope of “tenure” are

untenable. The Indiana Supreme Court in Watson

was “presented [with] an early opportunity to explore

the reach of the teacher tenure law’s protections.”

Stewart v. Fort Wayne Cmty. Sch., 564 N.E.2d 274,

278 (Ind. 1990). In holding that the Act required the

retention of tenured teachers over non-tenured

teachers during a RIF, the Indiana Supreme Court

noted that “[t]o hold otherwise would be contrary to

the entire spirit and purpose of the Act [and would]

nullify the Teachers’ Tenure Act . . . [it would] permit

the trustee to do indirectly that which the law

expressly forbids him to do directly.” Watson, 23

40a

N.E.2d at 423 (emphasis added). Indeed, later courts

have noted that “Watson bestowed a powerful sword

on tenured teachers[.]” Stewart, 564 N.E.2d at 278.

In the Court’s view, Watson specifically

interpreted the “right to continued employment by

virtue of the indefinite contract” to include the right

of tenured teachers to be retained over non-tenured

teachers in a RIF, lest the Act be nullified. Indiana

courts have held that “[a] written contract does not

preempt a teacher’s rights secured by the statutes,”

Chambers v. Cent. Sch. Dist. Sch. Bd. of Greene Cnty.,

514 N.E.2d 1294, 1297 (Ind. Ct. App. 1987); see also

Stiver v. State ex rel. Kent, 1 N.E.2d 592, 593 (Ind.

1936) (holding that “the execution of a new contract

for the [school] year. . . between the [teacher] and

[school corporation] did not terminate the tenure of

[the teacher]. The legislative purpose in authorizing

a new contract to be entered into by a tenure teacher

and the employing school corporation was not to

provide a means of terminating tenure.”). In light of

this, the Court finds that Mr. Elliott has asserted a

contractual right that is protected by the Contracts

Clause. See Pl.’s Resp. at 3 (“[T]enure rights cannot

be supplanted by a definite contract, lest the very

concept of tenure be rendered meaningless.”). The

Court thus proceeds to the next step in the Contracts

Clause analysis.

2.

Substantial Impairment

Mr. Elliott next argues “that SB 1 impaired [his]

contractual tenure rights and that such an

impairment is substantial enough to violate the

Contracts Clause.” Pl.’s Br. at 13. There is no doubt

that SB 1’s RIF provision, as Mr. Elliott notes, “is

41a

plainly the source of [the] impairment of Elliott’s

contractual rights.” Id. Disagreement exists as to

whether that impairment was substantial.

Mr. Elliott argues that in Watson, the Indiana

Supreme Court held that the contractual rights given

to permanent teacher under the Act included the

right to be retained over nontenured teachers in a

RIF. See Watson, 23 N.E.2d at 423 (“If a justifiable

decrease in the number of teaching positions should

be held to give to the trustee the power to choose

between tenure [and] non-tenure teachers, both of

whom are licensed to teach in the teaching position

which remains, he is thereby given the power to

nullify the Teachers’ Tenure Act[.]”). Thus, Mr.

Elliott argues that SB 1’s RIF provision, which

expressly mandates that performance is the only

criterion to be considered in a RIF situation,3

regardless of a teacher’s tenure status, is a “total

destruction” of his contractual right. Pl.’s Resp. at 9.

The Board and the State disagree.

The main thrust of the Board’s argument is that

SB 1 only made “limited” changes to Indiana’s teacher

laws. See Board’s Br. at 12 (“The limited changes

made by the Indiana General Assembly to the teacher

tenure statutes do not rise to the level of a substantial

impairment.”). For example, it correctly notes that

“the right to an indefinite contract continues following

amendment” and that “the same grounds for

cancellation of an indefinite contract [still] exist[.]”

3 The Court understands that if teachers are placed in the

same performance category, other criteria may be considered.

See Ind. Code § 20-28-7.5-1(d); Ind. Code § 20-28-9-1.5(b).

42a

Id. Moreover, it notes that SB 1 still provides that “a

teacher with an indefinite contract is entitled to

notice, a statement of the reasons for the cancellation,

an opportunity to meet with the Board to offer

evidence

opposing

the

cancellation,

the

Superintendent’s recommendation on cancellation,

and a majority vote of the Board before the contract

can be cancelled.” Id. at 16. While these are all true

statements, the Court fails to see their import. In

arguing this way, the Board focuses on what SB 1 in

general did not do instead of focusing on what SB 1’s

RIF provision did do.

In directly addressing SB 1’s RIF provision, the

Board notes that SB 1 did not change the language of

the Act, but rather simply “added language to clarify

the General Assembly’s intent that performance be

the primary consideration in a reduction-in-force.”

Board’s Br. at 3. Therefore, in the Board’s opinion,

“[b]ecause the amendment was done to clarify

legislative intent due to the absence of any criteria for

a RIF in the former statute, this is not a substantial

impairment.” Id. The Court believes that the General

Assembly’s desire for performance to be the primary

determiner in RIF situations is best addressed in the

next step of the Contracts Clause analysis; the

reasons why the General Assembly amended the Act,

however, do not address the issue of whether it

substantially impaired Mr. Elliott’s contractual right

in doing so.

For its part, the State makes a similar argument

to that which it made above. It argues that Mr. Elliott

could not have reasonably relied on the right to be

retained over non-tenured teachers in a RIF because

43a

the definite contract he signed in November 2011,

incorporated SB 1’s RIF provision. See State’s Br. at

14 (“Because Elliott could not have reasonably relied

on the rights he asserts in entering into his contracts

with Madison Schools, the State’s legislative

revocation of those ‘rights’ did not . . . substantially

impair those rights.”). As noted above, the Court

interprets Watson to incorporate the right of tenured

teachers to be retained over nontenured teachers into

the contractual “tenure” right espoused in Brand.

Accordingly, the State’s argument are without merit.

The Court cannot fathom a more substantial

impairment than the one in the case at bar. Had SB

1 not been enacted, the Board would have been

required to retain Mr. Elliott over any non-tenured

teachers for positions in which he was qualified to

teach, save any other grounds it might have had to

cancel Mr. Elliott’s contract. As there were six nontenured teachers who were retained in MCS in

positions for which Mr. Elliott was qualified to teach,

this means that had SB 1 not been enacted, Mr.

Elliott’s contract would have been renewed. SB 1’s

RIF provision completely destroyed Mr. Elliott’s

contractual right.

3.

Reasonable and Necessary to Serve an

Important Public Interest

Having determined that SB 1’s RIF provision was

a substantial impairment of Mr. Elliott’s contractual

right, the Court now turns to whether SB 1’s RIF

provision was reasonable and necessary to serve an

important public interest.

44a

If the state regulation constitutes a substantial

impairment, the State, in justification, must have

a significant and legitimate public purpose behind

the regulation, such as the remedying of a broad

and general social or economic problem. . . . The

requirement of a legitimate public purpose

guarantees that the State is exercising its police

power, rather than providing a benefit to special

interests.

Energy Reserves, 459 U.S. at 411-12 (internal

citations omitted). To begin, both the Board and the

State note that in Indiana, the duty of the General

Assembly to provide an education to the citizens of the

state is contained in the Constitution: “it should be

the duty of the General Assembly to . . . provide, by

law, [] a general and uniform system of Common

Schools[.]” Ind. Const. Art. 8, § 1. In accordance with

this charge, both the Board and the State note that

the goal of SB 1—including SB 1’s RIF provision—was

to improve teacher quality. The Board explains that

the language [of SB 1] demonstrates an emphasis

on teacher effectiveness, including student

achievement and growth. . . . Thus, the statutory

language evidences the General Assembly’s intent

to exercise its police power to ensure the education

of its citizens was based upon teacher effectiveness

and student achievement and not seniority.

Board’s Br. at 9; see also Dkt. No. 58-2, Schlegel Aff.

¶ 12 (“The primary concerns for policymakers at the

time were how to modify the Teacher Tenure Act to

improve the quality of education being provided to

students by ensuring schools appropriately measure

teacher effectiveness/performance, emphasizing the

45a

importance of teacher effectiveness and performance

in making decisions about teacher retention and

layoffs, and providing school administrators with

greater flexibility and discretion in making reductionin-force decisions.”).4 Similarly, the State explains

that “[t]he goal of SB 1 was to raise teacher quality by

valuing teacher performance over longevity.” State’s

Br. at 17.

The State notes that percolating in the years

leading up to the 2011 educational reforms was “a

long-developing public consensus, founded on

objective data, that traditional public schools had not

been successful over the past several decades.” Id. It

argues that Indiana’s graduation rates were low,

drop-out rates were high, and scores on national

assessments remained static. Juxtaposed to this was

the “growing body of research show[ing] a strong

correlation between teacher quality and positive

educational outcomes.” Id. at 19.

4 In his Reply, Mr. Elliott moved to strike this affidavit as

well as the corresponding evidentiary submissions (Dkt. Nos. 584 through 58-11) that the Board relied on in its CrossMotion for

Summary Judgment. See Pl.’s Resp. at 10-14. His primary

argument was that he did not have the opportunity to depose

Mindy Schlegel, a former Indiana Department of Education

employee, because during discovery, the Board did not list Ms.

Schlegel as a potential witness; Mr. Elliot also filed a Motion for

Additional Discovery and to Amend the Briefing Schedule

arguing the same (Dkt. No. 76). His motion was granted by the

Magistrate Judge (Dkt. No. 78). Mr. Elliott has since deposed

Ms. Schlegel and filed a Surreply (Dkt. No. 84). Accordingly, his

motion to strike Ms. Schlegel’s affidavit and the attached

evidentiary submissions is denied.

46a

Perhaps most relevant to SB 1’s emphasis on

teacher quality, was the grade Indiana received in the

State Teacher Policy Yearbook, published by the

National Council on Teacher Quality (“NCTQ”).5 For

the years 2008, 2009, and 2010, Indiana received an

overall grade of ‘D’ in the following categories:

delivering well prepared teachers; expanding the

teaching pool; identifying effective teachers; retaining

effective teachers; and exiting ineffective teachers.

Dkt. Nos. 58-3 through 58-5. Further, in 2010, the top

three “Critical Attention Areas” identified by the

NCTQ for Indiana were to “ensure that teacher

evaluations assess effectiveness in the classroom”; to

“connect teacher tenure decisions to teacher

effectiveness”; and to “prevent ineffective teachers

from remaining in the classroom indefinitely.” Dkt.

No. 58-5. Thus, the State argues, there was a need to

change Indiana’s education laws to specifically

emphasize teacher quality.

For his part, Mr. Elliott argues that the state of

education in Indiana was not nearly as dire as the

State argues.

He challenges the statistics on

graduation rates and notes that the State distorts the

data from the national assessments. He also argues

that the NCTQ’s studies have “been roundly criticized

as biased and lacking in rigor and its conclusions

contradict those reached by venerated organizations.”

Pl.’s Resp. at 18. Essentially, Mr. Elliott disagrees

5 “The National Council on Teacher Quality advocates for

reforms in a broad range of teacher policies at the federal, state

and local levels in order to increase the number of effective

teachers.” http://www.nctq.org/about/ (last visited February 3,

2015).

47a

that the education system in Indiana needed to be

reformed and disagrees with the chosen means to do

so—emphasizing teacher quality. See id. at 22

(“[E]ven if student performance were seriously

deficient in Indiana . . . [E]ven if teachers can, in

theory, have as large an impact on that performance

as the highly questionable research presented by the

Defendants claims . . .”). Mr. Elliott may feel that the

education reforms were not needed; however, this

does not mean that SB 1 does not serve an important

public interest. See, e.g., CTS Corp. v. Dynamics

Corp. of Am., 481 U.S. 69, 92 (1987) (“The

Constitution does not require the States to subscribe

to any particular economic theory. We are not inclined

to second-guess the empirical judgments of

lawmakers concerning the utility of legislation[.]”)

(internal quotation marks omitted).

Mr. Elliott’s disagreements aside, in all, the Court

finds that providing a quality education—specifically,

improving teacher quality—was an important public

interest underlying SB 1. As expressed by the

Defendants: “the statutory language [of SB 1]

demonstrates that the General Assembly had

concerns about assessing teacher effectiveness,

retaining the most effective teachers, and measuring

teacher effectiveness based on student growth and

achievement. This certainly is a ‘significant and

legitimate’ public purpose for the statutory

amendments.” State and Board’s Surreply at 7-8.

Thus, the crux of this case will turn on whether the

Indiana General Assembly’s decision to enact SB 1’s

RIF provision was reasonable and necessary to

improve teacher quality.

48a

Initially, the Court notes that deference is usually

given to the legislature’s conclusion as to what is

necessary and reasonable. See Energy Reserves, 459

U.S. at 413 (noting that in reviewing social

regulations, “courts properly defer to legislative

judgment as to the necessity and reasonableness of a

particular measure”). Mr. Elliott, however, argues

that the Court must apply heighted scrutiny because

Indiana abrogated its own contractual obligations in

enacting SB 1’s RIF provision.

In U.S. Trust Co of New York v. New Jersey, the

Supreme Court held as follows:

As with laws impairing the obligations of private

contracts, an impairment may be constitutional if

it is reasonable and necessary to serve an

important public purpose. In applying this

standard, however, complete deference to a

legislative assessment of reasonableness and

necessity is not appropriate because the State’s selfinterest is at stake.

U.S. Trust Co. of New York v. New Jersey, 431 U.S. 1,

25-26 (1977) (emphasis added). This approach was

also noted in Energy Reserves: “Unless the State itself

is a contracting party . . . courts properly defer to

legislative judgment as to the necessity and

reasonableness of a particular measure.” Energy

Reserves, 459 U.S. at 412-13 (emphasis added); see

also Peick v. Pension Ben. Guar. Corp., 724 F.2d 1247,

1270 (7th Cir. 1983) (“Energy Reserves Group very

clearly indicates that the Court continues to view the

contract clause as requiring two different levels of

analysis depending upon whether a State is one of the

contracting parties.”).

49a

The State disagrees that heightened scrutiny is

appropriate in this case. It argues that the heightened

scrutiny espoused in U.S. Trust only applies when a

state has entered into some sort of financial contract,

and thus the heightened scrutiny is only applicable

when the State’s financial interest is at stake.6 Mr.

Elliott correctly argues that this distinction has not

been expressly made in any case law; moreover, he

notes that “the Seventh Circuit has suggested that

the heightened scrutiny standard does apply in cases

involving contractual tenure rights.” Pl.’s Resp. at 15.

Indeed, in Pitman v. Chicago Bd. of Educ., 64 F.3d

1098 (7th Cir. 1995), the Seventh Circuit, noted that

“[i]f tenure for principals were a term in a contract

between the principals and the board of education, the

state could not abrogate the term without a greater

showing of justification than has been attempted.” Id.

at 1104. The Court, therefore, will apply heightened

scrutiny to this analysis as suggested by the Seventh

Circuit.

The State notes that all of the 2011 education

reforms, including SB 1’s RIF provision, were “aimed

at improving student performance through retaining

skilled teachers:

performance-based raises; an

overhaul of the evaluation system that based teacher

For its part, the Board argues that SB 1 should not be

subject to heightened scrutiny “because the contracts at issue

are not between the State and another party. Rather, the

contracts are between a teacher and a school corporation[.]”

Board’s Br. at 9-10. The Court disagrees. As noted above, Mr.

Elliott’s contractual right to be retained over non-tenured

teachers in a RIF is part of his contractual tenure right given to

Mr. Elliott via statute by the State. Thus, the contractual right

at issue is between Mr. Elliott and the State.

6

50a

performance reviews on a combination of student

performance, administrators’ observations, and

district-specific factors; and limitations on the scope

of collective bargaining.” State’s Resp. at 18. It thus

argues that “SB 1’s alteration of retention factors is

essential to the efficacy of the 2011 reform package.”

Id.

The Court disagrees that it was “essential” and/or

necessary to enact SB 1’s RIF provision to accomplish

the asserted state interest.

What SB 1’s RIF

provision eliminated was the mandatory retention of

tenured teachers during a RIF situation. Of course,

however, Indiana was not concerned with the

mandatory retention of all tenured teachers; Indiana

was concerned about the mandatory retention of poorperforming tenured teachers. Specifically, Indiana

was concerned that retaining poor-performing,

tenured teachers would have a negative impact on

student achievement. Indeed, both the State and the

Board highlight this throughout their briefs. See, e.g.,

State’s Br. at 19 (“A growing body of research shows

a strong correlation between teacher quality and

positive educational outcomes.”); State’s Resp. at 18

(quoting an educational journal that concluded that

“[t]he policy of eliminating the least effective teachers

is very consistent with . . . the policies found in highperforming school systems around the world”); Id. at

20 (arguing that it would be a disservice to “Hoosier

children [to] subject[] them to the instruction of

ineffective teachers, who may not retire for another

thirty years”). Thus, when forced to reduce its

workforce, Indiana wanted school boards to be able to

terminate the worst teachers—regardless of their

tenure status.

51a

The problem is that school boards have always had

the ability to fire poor-performing tenured teachers;

in fact, school boards did not—indeed, they still do

not—have to wait for a RIF in order to terminate poorperforming tenured teachers. As noted above, prior

to 2011, a tenured teacher’s contract could be

cancelled on grounds of immorality, insubordination,

neglect of duty, incompetence, a justifiable decrease

in the number of teaching positions, a conviction, or

for a good and just cause. Dkt. No. 41-4, Ind. Code.

§ 20-28-7-1(a)(1)-(7) (2010). Indeed, the Supreme

Court noted that these reasons “cover every

conceivable basis for such action growing out of a

deficient performance of the obligations undertaken

by the teacher, and diminution of the school

requirements.” Brand, 303 U.S. at 108 (emphasis

added). These reasons remained the same after SB 1

was enacted; the only change SB 1 made is that

“incompetence” now includes receiving a rating of

“ineffective” for two consecutive years or receiving a

rating of “ineffective” or “improvement necessary” for

three years in a five year period. See Ind. Code § 2028-7.5- 1(e)(4). Thus there was—and still is—a means

of getting rid of ineffective teachers: terminate their

contracts for incompetence. Not only was this an

option pre-SB 1, but now that SB 1 has been enacted,

there are objective means, specifically tied to the

annual performance ratings, to measure whether a

teacher is “incompetent.” Moreover, under SB 1,

annual evaluations are mandatory, giving school

boards ample opportunity to thoroughly evaluate the

quality of their tenured teachers.

Also troubling is that SB 1’s RIF provision seems

to be unconnected to the reports and publications the

52a

IDOE considered in drafting SB 1. See Board’s Br. at

21-22 (“Ms. Schlegel, who worked under thenSuperintendent of Public Instruction Tony Bennett,

recalls that they considered the 2008, 2009, and 2010

NCTQ Reports when proposing the statutory

amendments to the Teacher Tenure Law.

Additionally, they reviewed several reports published

by The New Teacher Project (“TNTP”) . . . and two

publications by the Measures of Effective Teaching

(“MET”) Project launched by the Bill and Melinda

Gates Foundation.”) (internal citations omitted).7

Both the Board and the State are correct that, in

general, these reports emphasize the importance of

teacher quality, yet none focus on RIF situations as

the means to do so.

For example, as noted above, the NCTQ 2009

State Teacher Policy Yearbook graded Indiana in five

broad categories related to teacher quality, including

identifying effective teachers, retaining effective

teachers, and exiting ineffective teachers. Dkt. No.

58-4. Certain “goals” were also identified for Indiana

in order for it to improve its teacher quality, and

indeed, many of the NCTQ’s “Goals” for Indiana were

implemented by SB 1. See id. at 9 (“The state should

7 The Court fully understands that “the State need not prove

what was actually considered by the members of the General

Assembly” and that “the Indiana General Assembly keeps no

legislative history.”

Board and State’s Surreply at 4.

Nevertheless, Ms. Schlegel, “who served as the Indiana

Department of Education Senior Advisor for Educator

Effectiveness and Policy from May 2009 to May 2012,” and who

“was involved in the research and policy considerations that led

to [SB 1]” identified these reports as being considered. Board’s

Br. at 21-22.

53a

require annual evaluations of all teachers and

multiple evaluations of all new teachers”; “The state

should require instructional effectiveness to be the

preponderant criterion of any teacher evaluation”;

“The state should support performance pay.”).

Notably absent is any reference to RIFs.8 This seems

to suggest, as the Court has indicated, that

eliminating ineffective teachers in RIF situations is

not necessary to improve teacher quality.

Unfortunately, neither the State nor the Board

explain why the former cancellation procedures were

inadequate to address teacher quality such that SB

1’s RIF provision was necessary. Their arguments are

mostly focused on addressing the reasonableness of

SB 1 and contesting Mr. Elliott’s suggested

alternatives. Nevertheless, in the Court’s view, if

school boards utilize the procedures already in place,

there is no need, in a RIF situation, to have to choose

between poor-performing teachers and effective

teachers, regardless of their tenure status. Utilizing

the cancellation procedures already provided for is

adequate to accomplish both the goal of “getting rid

of” ineffective teachers and retaining effective

teachers. There simply is no basis for the repeated

assertion of the State and Board that SB 1’s RIF

provision is necessary, lest Indiana students be

subjected to “ineffective” teaching. See, e.g., State’s

Resp. at 20 (warning of the “the potential harm” to

students being taught by “ineffective teachers”).

Interestingly, a “Goal” was for Indiana to “articulate

consequences for teachers with unsatisfactory evaluations,

including specifying that teachers with multiple unsatisfactory

evaluations are eligible for dismissal.” Id.

8

54a

Indeed, even Mr. Elliott himself acknowledges that “if

the Board truly believed that [he] was an ineffective

teacher, it could have employed these procedures to

terminate him at any time during his 19 years of

employment.” Pl.’s Resp. at 24.

Accordingly, the Court finds that SB 1’s RIF

provision is not necessary to accomplish the goal of

improving teacher quality—as there are already

adequate measures to address the State’s concerns—

and, as applied to Mr. Elliott, it is unconstitutional.

See Allied Structural Steel Co. v. Spannaus, 438 U.S.

234, 247 (1978) (“[T]here is no showing in the record

before us that this severe disruption of contractual

expectations was necessary to meet an important

general social problem.”); U.S. Trust, 431 U.S. at 2931 (“[I]t cannot be said that total repeal of the

covenant was essential; a less drastic modification

would have permitted the contemplated plan . . . a

State is not free to impose a drastic impairment when

an evident and more moderate course would serve its

purposes equally well.”). Mr. Elliott’s motion for

summary judgment (Dkt. No. 82) is therefore

GRANTED as to Count I, and the Board’s motion for

summary judgment (Dkt. No. 56) is DENIED as to

Count I. The State’s motion for summary judgment

(Dkt. No. 59) is also DENIED.

B.

Mr. Elliott’s State Law Claims

Counts II through IV of Mr. Elliott’s Amended

Complaint allege violations of Indiana state law, see

Amend. Compl. ¶ 19, 26, 34 (all asserting that the

Board’s action in cancelling Mr. Elliott’s teaching

contract violated Indiana law); Count V asserts that

the Board’s selection of Mr. Elliott for nonrenewal

55a

was not supported by substantial evidence. See id.

¶ 36 (“There was no substantial evidence to

demonstrate that Elliott’s teaching contract should be

cancelled based on performance and the School

Board’s decision to cancel Elliott’s teaching contract

was arbitrary and capricious”).9 The relief Mr. Elliott

seeks in these Counts is the same as what he seeks in

Count I: “that judgment be entered for the Plaintiff

and that the School Board be ordered to pay damages

for lost wages and benefits, that the Court order that

Plaintiff be reinstated to his teaching position, and for

all other relief proper in the premises.” Id. ¶¶ 17, 24,

28, 34, 37. The Court has ruled in favor of Mr. Elliott

on his constitutional claim (Count I); thus, it need not

consider the remaining state law claims, as they

appear to be mooted by the complete relief Mr. Elliott

is entitled to under Count I. Counts II through V are

therefore DISMISSED WITHOUT PREJUDICE.

IV.

CONCLUSION

For the foregoing reasons, Mr. Elliott’s motion for

summary judgment (Dkt. No. 82) is GRANTED IN

PART. The Board’s motion for summary judgment

(Dkt. No. 56) is DENIED IN PART. The State’s

motion for summary judgment (Dkt. No. 59) is

DENIED. Within 21 days of the date of this

Entry, the parties shall file either a joint notice, or if

they cannot agree, separate notices setting forth what

issues, if any, remain to be resolved before final

9 As noted above, the State intervened solely to defend the

constitutionality of SB 1’s RIF provision; accordingly, it did not

address Mr. Elliott’s state law claims (Counts II through V) in

its briefs.

56a

judgment is issued consistent with this Entry and

what the final judgment should include, given Mr.

Elliott’s prayer for relief.

SO ORDERED: 03/05/2015

s/ William T. Lawrence

Hon. William T. Lawrence, Judge

United States District Court

Southern District of Indiana

57a

Filed 11/21/16

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF INDIANA

INDIANAPOLIS DIVISION

JOSEPH R. ELLIOTT

Plaintiff,

v.

BOARD OF SCHOOL TRUSTEES OF MADISON

CONSOLIDATED SCHOOLS,

Defendant.

Case No. 1:13-cv-319-WTL-DML

JUDGMENT

The Court having entered summary judgment in

favor of the Plaintiff, judgment is hereby ENTERED

in favor of the Plaintiff and against the Defendant in

the amount of $253,486.00, which includes back pay

in the amount of $224,309.00 and pre-judgment

interest in the amount of $29,177. In addition, the

Court awards the Plaintiff attorneys’ fees in the

amount of $192,972.50. Post-judgment issue shall

accrue as provided by 28 U.S.C. § 1961(a).

SO ORDERED: 11/21/16

s/ William T. Lawrence

Hon. William T. Lawrence, Judge

United States District Court

Southern District of Indiana