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Elliott v. Board of School Trustees of Madison Consolidated Schools

United States Court of Appeals, Seventh Circuit

December 4, 2017

Joseph R. Elliott, Plaintiff-Appellee,
Board of School Trustees of Madison Consolidated Schools, Defendant-Appellant, and State of Indiana, Intervenor-Appellant.

          Argued September 6, 2017

         Appeal from the United States District Court for the Southern District of Indiana, Indianapolis Division. No. 13-cv-319 - William T. Lawrence, Judge.

          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 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 (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.

         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 Con-sol. Schools, 2015 WL 1125022 (S.D. Ind. March 12, 2015). We affirm.

         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, 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 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, 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).[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.; 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 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 § 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.[2]

         Starting 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 § 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).

         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.

         D. Defendant&#39 ...

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