Joseph R. Elliott, Plaintiff-Appellee,
Board of School Trustees of Madison Consolidated Schools, Defendant-Appellant, and State of Indiana, Intervenor-Appellant.
September 6, 2017
from the United States District Court for the Southern
District of Indiana, Indianapolis Division. No. 13-cv-319 -
William T. Lawrence, Judge.
Bauer, Easterbrook, and Hamilton, Circuit Judges.
Hamilton, Circuit Judge.
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 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.
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 (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 non-tenured
teachers. The new Indiana law eliminates that right and
orders school districts to base layoff choices on performance
reviews without regard for tenure status.
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 Con-sol. Schools, 2015 WL
1125022 (S.D. Ind. March 12, 2015). We affirm.
Legal and Factual Background
Indiana's Teacher Tenure Law
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, 23 N.E.2d 420, 423 (Ind. 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
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, 180
N.E. 471, 474 (Ind. 1932); see also Anderson, 303
U.S. at 107 (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). 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.; Lost Creek School Township v.
York, 21 N.E.2d 58, 64 (Ind. 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, 12 N.E.2d 927,
930 (Ind. 1938) (parties cannot circumvent Act by relying on
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.
Senate Bill 1
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 § 20-28-7-2
(2010). In 2011, Indiana amended the Act through Senate Bill
1, which took effect in 2012. As relevant here, Senate Bill 1
established a mandatory teacher-evaluation regime and removed
the protection for tenured teachers in layoffs.
with the 2012-13 academic year, Senate Bill 1 requires
schools to implement annual teacher-evaluation 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 § 20-28-11.5-4(c). Schools must then assign
each teacher a rating: highly effective, effective,
improvement necessary, or ineffective. Ind. Code §
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).
Plaintiff's Employment History
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.
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.