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State, Indiana Department of Correction v. Mills

Court of Appeals of Indiana

April 26, 2017

State of Indiana, Indiana Department of Correction, and Indiana State Employees' Appeals Commission, Appellants-Respondents,
Debra Mills, et al., Appellees-Petitioners.

         Appeal from the Marion Superior Court The Honorable Thomas J. Carroll, Judge Trial Court Cause No. 49D06-1407-PL-25580

          Attorneys for Appellant Curtis T. Hill, Jr. Attorney General of Indiana Frances Barrow Kyle Hunter Deputy Attorneys General Indianapolis, Indiana.

          Attorney for Appellee Steven T. Fulk Fulk & Associates, LLC Indianapolis, Indiana.

          Riley, Judge.


         [¶1] Appellants-Respondents, State of Indiana (State), Indiana Department of Correction (DOC), and Indiana State Employees' Appeals Commission (SEAC) (collectively, the State), appeal the trial court's Order on Petition for Judicial Review, granting judgment in favor of Appellees-Petitioners, Debra Mills (Mills), Thomas Bird (Bird), Jay Matthews (Matthews), Chris Weeks (Weeks), Linda Rumple (Rumple), Darrel Miller (Miller), and Scott Gillenwater (Gillenwater) (collectively, the Employees).[1]

         [¶2] We affirm in part, reverse in part, and remand for further administrative proceedings.


         [¶3] The State raises three issues on appeal, which we consolidate and restate as the following single issue: Whether the trial court erred in reversing the Final Order of the SEAC based on the fact that the State presented substantial evidence that the Employees were laid off from their positions at the DOC in accordance with statutory requirements.


         [¶4] In 2009, Indiana's governor and the commissioner of the DOC implemented the "Facility Forward" initiative, which was designed to "enhance prison capacity, maximize current state property and assets, decrease spending through cost savings, and increase overall efficiencies, while still providing the utmost safety and security for the State of Indiana." (Agency Record Vol. II, p. 342). Part of the Facility Forward plan called for transferring the juvenile inmates from the Indianapolis Juvenile Correctional Facility (IJCF) in Indianapolis, Marion County, Indiana, to a new facility-the Madison Juvenile Correctional Facility (MJCF)-in Madison, Jefferson County, Indiana. The MJCF was slated for opening in October of 2009. Part of the cost-saving measures of the Facility Forward initiative also included replacing certain DOC employees with private contractors.

         [¶5] On July 7, 2009, DOC administrators and representatives from the Indiana State Personnel Department (SPD) called for a meeting with the institutional teachers at the IJCF-i.e., the Employees. The Employees were notified that, in conjunction with the transfer of the juvenile offenders to the MJCF, the institutional teaching positions at IJCF were being eliminated because the DOC intended to fill the teaching roles through contracts with universities. Accordingly, the Employees' employment would be terminated as of August 14, 2009. During subsequent meetings with the Employees on July 10, 2009, and July 17, 2009, it was made clear to the Employees that they were being laid off due to the elimination of their positions; they were not being terminated for cause.

         [¶6] At the time, Indiana's State Personnel Act was in effect, which set forth specific procedures to be used in the event of a layoff of merit employees in the State's classified service (which, as the parties agree, applies to the Employees). See Ind. Code § 4-15-2-32 (repealed by P.L. 229-2011, Sec. 269, effective July 1, 2011). Upon a department head's determination that a layoff was necessary, the department head was required to notify the director of the SPD, who would then compute the retention points of each employee within the affected class based upon the employees' seniority, service ratings, veterans' preference status, and employment status. I.C. § 4-15-2-32(a) (repealed 2011). These retention scores were to be utilized to determine the order of layoff, whether employees were eligible to displace (i.e., bump) others in the department, and the employees' priority status on a re-employment list. I.C. § 4-15-2-32 (repealed 2011). At each of the meetings discussing their impending layoff, the Employees requested copies of their retention scores. While a few Employees recalled that the SPD representatives promised to provide the retention scores at a subsequent meeting but failed to do so, other Employees stated that they were explicitly told that retention scores would not be figured because their positions were being eliminated and they had no bumping or other layoff rights. Regardless, it is undisputed that the Employees were not provided with a copy of their retention scores until after litigation commenced.

         [¶7] On July 31, 2009, the Employees filed individual merit complaints with the DOC, indicating that they were wrongfully terminated without cause, that their terminations were retaliatory, that they had not been advised of their retention points, that their bumping/reassignment rights were ignored, and that the timing of the termination created a hardship.[2] Although not all of the Employees sought specific relief, others explicitly requested to be retained in their current positions at their current salaries or to otherwise be reassigned as an institutional teacher at another DOC facility. On August 3, 2009, the DOC responded to the Employees and advised that it was unable to provide the requested relief. On August 14, 2009, the Employees were officially terminated from their institutional teaching positions with the DOC.

         [¶8] Sometime after the July meetings, the Employees received letters regarding their layoffs and were asked to submit a form indicating whether they wanted to be considered for re-employment should any other institutional teaching positions become available. All of the Employees opted to be placed on a re-employment list, with some of them specifying that they would be willing to work within any county in Indiana and with others indicating that they would accept employment only in certain counties. At the time he received his layoff letter, Bird also received notice that he was eligible to "bump" into a correctional sergeant or a correctional officer position; Bird declined these DOC employment opportunities. (Agency Tr. p. 155). In addition, shortly after the layoff, both Weeks and Mellott received letters, inviting them to accept an institutional teacher position in a DOC facility in Fort Wayne, Indiana. Weeks declined, but Mellott accepted the position; however, Mellott quit after thirteen weeks upon discovering that layoffs were imminent at that facility as well. Also, at some point after the layoff, both Miller and Hygh received letters from the SPD indicating that they had been declined for state jobs for which they had never applied.

         [¶9] On August 18, 2009, the Employees appealed their terminations to the SPD. On August 25, 2009, the SPD denied the Employees' merit complaints because it found that the DOC had followed the proper procedures for layoffs. The SPD further informed the Employees that they had been "placed on a Recall list for the Institutional Teacher classification and will remain on the list for one (1) year from the date of the layoff." (Agency Record Vol. I, p. 7).

         [¶10] On September 9, 2009, the Employees filed requests for administrative review with the SEAC, [3] which would be heard by an administrative law judge (ALJ). On October 5, 2009, the ALJ conducted a prehearing conference and issued a Scheduling Order on October 13, 2009. Pursuant to the Scheduling Order, the "[SPD] [was to] calculate retention scores for [the Employees]. And [SPD] and/or [the DOC] [would] answer and document whether any institutional teacher positions exist currently in Marion County. Depending on the for[e]going responses, [the Employees] [would] consider whether they wish to pursue any further theories of remedy or recovery and whether SEAC is the preferred forum for doing so." (Agency Record Vol. I, p. 63). A telephone status conference was held on November 2, 2009, and the ALJ, again, subsequently issued a Scheduling Order. This Scheduling Order noted that the SPD had "provided [the Employees'] retention scores as required by law and [the DOC] ha[d] indicated [six] institutional teacher positions remain in Marion [County], [three] vocational teaching positions and [three] administrators." (Agency Record Vol. I, p. 65).

         [¶11] Almost two years later, on October 24, 2011, the Employees filed a motion for summary judgment. In support of their motion, the Employees argued that the DOC violated the State Personnel Act because it "intentionally created vacancies by firing the [Employees] in furtherance of [using private contractors], willfully refused to follow the statute regarding those vacancies, and further (inexplicably) refused to grant the [Employees] their retention scores or bumping rights pursuant thereto." (Agency Record Vol. I, p. 94). On November 3, 2011, the ALJ ordered the Employees to supplement their summary judgment motion to show that they had higher retention scores than the remaining institutional teachers and that they were entitled to bump into the positions of those remaining teachers. The Employees requested permission from the ALJ to conduct additional discovery to compile retention scores, but the DOC responded that, on October 15, 2009, it had faxed "a table purporting to be a listing of all Institutional Teacher 4 positions in Marion County on July 7, 2009, " along with their retention scores. (Agency Record Vol. I, p. 283). Accordingly, determining that the Employees were in possession of all necessary information, the ALJ instructed them "to revise the chart so it indicates on its face its conformity and accuracy 'as of' the date of layoffs at issue, and so it indicates which positions survived the layoff." (Agency Record Vol. I, p. 283).

         [¶12] On February 27, 2012, the ALJ denied the Employees' motion for summary judgment, finding that the Employees had failed to supplement their motion as ordered and that they "[f]ailed to articulate a cogent claim upon which relief can be granted that goes beyond a speculative or vague claim of a state conspiracy to make lawful independent contracting decisions that the [Employees] simply do not agree with." (Agency Record Vol. I, p. 287). In addition, as to the Employees' purported rights to "bump" into other DOC positions, the ALJ noted that the Employees made "no formal designation of evidence . . . and little use of such retention scores to show what alleged, specific job positions the [Employees] are claimed entitled to bump into." (Agency Record Vol. I, pp. 282-83 n.1). The ALJ ordered the Employees to show good cause, within ten days, as to why their case should not be dismissed with prejudice.

         [¶13] On March 13, 2012, the ALJ dismissed the Employees' case for failing to tender good cause. However, the next day, the ALJ received the Employees' submission of good cause, which had apparently been filed on March 8, 2012. In their submission, the Employees proffered that the DOC had provided inadequate information to determine the accuracy of the proffered retention scores and whether any positions were available for the Employees to bump into. Because the Employees had timely filed their submission of good cause, on March 15, 2012, the ALJ vacated its order of dismissal. On April 3, 2012, the DOC responded to the Employees' tender of good cause, claiming that the Employees should have addressed the need for additional information on the matter of the retention points during the discovery phase. According to the DOC,

[p]ursuant to the file retention schedule set by the [Indiana] Department of Administration, personnel files are only kept in their entirety for one year. The State . . . no longer even uses the merit employment system. It would be an amazing, almost herculean burden on [the DOC] to have to reopen discovery and attempt to find information at this point. Every discovery request from [the Employees] received an appropriate response.

(Agency Record Vol. II, pp. 306-07).

         [¶14] On April 17, 2012, the ALJ conditionally lifted its show cause order. In addition, the ALJ noted that "[t]he limited discovery that [the Employees] seek is sworn answers from the [DOC] about the prior list of retention scores furnished in October[] 2009. This ALJ is skeptical that this discovery could not have been completed before, but [the Employees'] counsel says 'not so', and so in the interests of judicial patience and justice, limited discovery shall proceed" in the form of written interrogatories to the DOC "on the subject of the prior list of retention scores (only)." (Agency Record Vol. II, pp. 309-10). On August 1, 2012, the Employees requested a hearing with the ALJ because they believed the interrogatories they received from the DOC were insufficient and incomplete. The ALJ instructed the Employees that they could file a specific motion to compel, but it does not appear that the Employees ever did so.

         [¶15] On November 9, 2012, the DOC filed a motion to dismiss pursuant to Indiana Trial Rule 12(b)(6) and a motion for summary judgment pursuant to Indiana Trial Rule 56. The DOC argued that the Employees were properly laid-off pursuant to statutory requirements with no violations of layoff rights. The DOC also argued that it did not conduct the layoffs as a means of retaliation. On May 3, 2013, the ALJ granted in part and denied in part the DOC's motion for summary judgment (and found that the DOC's motion to dismiss was either moot or otherwise consolidated with the summary judgment motion based on overlapping arguments). In particular, the ALJ determined that the Employees "were terminated when their positions at the IJCF were eliminated, not for the failure of [the Employees] to perform their jobs adequately. Similarly, [the DOC] has sufficiently proven the events in question were a structured layoff under the former Governor's proper authority, and not for an improper motive." (Agency Record Vol. II, p. 434). However, because the DOC failed to establish that there is no genuine issue of material fact as to whether the Employees were denied their statutory layoff rights, the ALJ denied summary judgment on this basis. Moreover, because of the perpetual delays, which the ALJ largely attributed to the Employees, and because the Employees had requested several extensions to respond to the summary judgment motion but then failed to do so, the ALJ established that the Employees' recovery would be limited should they be found to prevail on the merits.

         [¶16] On June 3, 2013, the Employees filed a motion to correct error. Although neither the ALJ nor the DOC had received the Employees' response to the DOC's summary judgment motion, the Employees argued that such a response had been timely filed by deposit in the U.S. mail and should have been considered. On June 21, 2013, the DOC objected to the Employees' motion to correct error. On July 22, 2013, the ALJ partially granted and partially denied the Employees' motion to correct error. The ALJ vacated the portion of its decision limiting the Employees' possible recovery as Employees demonstrated that they had attempted to timely respond to the summary judgment motion. In all other respects, the ALJ declined to modify its summary judgment order.

         [¶17] On December 9, 2013, the ALJ conducted an evidentiary hearing with the sole issue being whether the Employees were denied their statutory layoff rights under Indiana Code section 4-15-2-32 of the State Personnel Act. During the hearing, the Employees testified to their belief that the retention points were not calculated prior to litigation such that they were deprived of their bumping and re-employment rights. Specifically, the Employees stated that they were told, in no uncertain terms, that their retention scores would not be calculated because they had no layoff rights. In turn, the DOC presented evidence from a supervisor at SPD, who testified that the Employees' retention points were calculated prior to the layoff even though the scores were never provided directly to the Employees per SPD policy. The SPD supervisor further added that only one of the Employees, Bird, qualified for bumping rights under the statute, and he declined such an offer.

         [¶18] On March 10, 2014, the ALJ issued its Findings of Fact, Conclusions of Law and Non-Final Order, denying and dismissing the Employees' merit complaints. The ALJ acknowledged that DOC "could have handled the lay[]off in a more delicate manner" but found "no statutory violation warranting damages." (Appellants' App. Vol. II, p. 61). Specifically, the ALJ determined that there was evidence that "the retention scores were calculated at or before the time of the layoff and used to check on bumping or retention"; there were no other positions into which the Employees could have moved by virtue of their retention scores; and the evidence revealed that a re-employment list or its "functional equivalent" was utilized. (Appellants' App. Vol. II, pp. 61, 63). On March 28, 2014, the Employees filed an objection to the ALJ's Non-Final Order with the SEAC. On June 17, 2014, the SEAC conducted an oral argument, and on June 30, 2014, the SEAC issued its Final Order, adopting the determination of the ALJ in its entirety.

         [¶19] On July 30, 2014, the Employees filed a Verified Petition for Judicial Review of the SEAC's decision with the trial court. The Employees named the State, the DOC, and the SEAC as responding parties (i.e., collectively, the State).[4] On February 19, 2016, the trial court conducted a hearing.[5] On April 6, 2016, the trial court issued its Order on Petition for Judicial Review of the Final Order of the State Employees' Appeals Commission, reversing the determination of the SEAC and instead finding in favor of the Employees. The trial court determined that the SEAC's Final Order was "arbitrary, capricious, not in accordance with law, an abuse of discretion, and not supported by substantial evidence." (Appellants' App. Vol. II, p. 29). Ultimately, the trial court concluded, in relevant part, that the State

did not compute retention scores at the time of layoff to determine the order of the layoff, did not assess bumping rights either with Marion County or contiguous counties, and did not create or utilize a re-employment list, but instead-by its own admission-ordered the layoff based upon licensure considerations contrary to statute.

(Appellants' App. Vol. II, p. 27). The trial court therefore reversed the SEAC's Final Order and remanded for entry in favor of the Employees and for proceedings on the Employees' damages.

         [¶20] The State now appeals. Additional facts will be ...

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