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Simon Seeding & Sod, Inc. v. Dubuque Human Rights Commission

Supreme Court of Iowa

May 19, 2017


         Appeal from the Iowa District Court for Dubuque County, Michael J. Shubatt, Judge.

         Employer appeals district court judgment upholding local commission's award of damages to former employee for racial discrimination.

          Erik W. Fern of Putnam, Fern & Thompson Law Office, P.L.L.C, Decorah, for appellant.

          Les V. Reddick of Kane, Norby & Reddick, P.C., Dubuque, for appellee Dubuque Human Rights Commission.

          Charles Gribble and Christopher Stewart of Parrish Kruidenier Dunn Boles Gribble Gentry Brown & Bergmann, L.L.P., Des Moines, for appellee Jermaine Stapleton.


         In this appeal, we must decide how to count employees to reach the threshold "numerosity" required to apply a local civil rights ordinance to a small business. The Dubuque ordinance, with language matching the Iowa Civil Rights Act (ICRA), exempts "any employer who regularly employs less than four individuals." The defendant, a landscaper whose hiring needs fluctuate seasonally, denies it met this threshold under its proposed formula of counting only workers who had been employed for twenty consecutive weeks. The Dubuque Human Rights Commission (DHRC) rejected the employer's numerosity challenge, found the employer racially discriminated against a temporary worker, and awarded damages. The district court affirmed. We retained the employer's appeal.

         For the reasons explained below, we conclude the DHRC correctly determined that the defendant "regularly employed" the requisite four or more individuals during its landscaping season. The DHRC properly used a payroll approach and rejected the employer's proposed twenty-week test. Because substantial evidence supports the DHRC's findings, we affirm the district court judgment upholding the damages awarded to the former employee.

         I. Background Facts and Proceedings.

         The agency record establishes the following facts. Simon Seeding & Sod, Inc. (Simon Seeding) operates a seasonal landscaping business based in Dubuque, Iowa. Jermaine Stapleton, now age thirty-three, worked for Simon Seeding in 2006 and again in 2012. Stapleton, an African-American, claims that Simon Seeding's owner, Leo Simon, discriminated against him based on his race.

         A. Events Leading to the Complaint.

         Stapleton grew up in Burnsville, Minnesota, and moved to Dubuque to attend Clarke College. He began working for Simon Seeding in April 2006. Stapleton recalled that Leo regularly referred to him using racial epithets while working, such as "chocolate guy" and "colored lad." Stapleton did not respond "in kind, " but in his words,

[A] few times I asked him, you know, not to do it but, you know, it was so continuous that it almost became, you know, an everyday thing so I just kind of took it all in stride because I needed the job so-

         Stapleton ceased working at Simon Seeding in September of 2006. He returned to work there six years later.

         Meanwhile, in 2008, Stapleton was convicted of possession of a controlled substance and sentenced to probation. In 2009, he was arrested for operating a motor vehicle while intoxicated, and the district court ordered him to the First Judicial District Dubuque Residential/Work Release Facility (work-release facility). Stapleton tested positive for narcotics and was sent to prison. In 2012, he was transferred from prison into the work-release facility, where residents were required to maintain employment. Stapleton approached Frank Berwanger, another resident, about returning to work at Simon Seeding. Berwanger worked for Leo there. Stapleton told Berwanger to tell Leo that he was the "colored guy" who worked for Leo in 2006. Leo did not remember Stapleton, but nonetheless hired him back at $8 per hour for twenty hours per week.

         Stapleton resumed working for Simon Seeding on March 15. Leo resumed calling him "chocolate guy, " "chocolate lad, " and "colored lad." Stapleton estimated Leo made such comments to him two or three times weekly. "Ninety percent of the time" Stapleton would ask Leo not to call him those words. Leo responded, "Oh Jay, don't worry, it's not that big of a deal, I'm just joking." Stapleton obtained another full-time job at Roofco in April, but continued to work for Simon Seeding part-time because he did not want to be disciplined at the work-release facility for quitting.

         On May 6, Leo picked Stapleton up from the work-release facility to drive with him to a job site in Wisconsin. Leo stated that Stapleton did not seem "right, " and Leo believed he may be "on" something. He asked Stapleton if he really wanted to work that day, and Stapleton said he did. When they arrived at the job site, it was raining and muddy. Leo could not find a chain he needed to pull machinery out of the mud. He said to Stapleton, "Stupid colored mother fucker, find my chain now!" Stapleton responded, "Man, can you please stop calling me that." Leo retorted, "Well, if you don't like it, you can walk home." Stapleton began walking back to the work-release facility, fifty to sixty miles away. A half hour later, a police officer stopped Stapleton to ask why he was walking along the highway. Stapleton explained the situation, and the police officer drove Stapleton back to the job site. The officer told Leo that Leo was responsible for getting Stapleton back to the work-release facility.

         Meanwhile, Leo had called the work-release facility and spoken with residential officer Gael Huinker, who made the following notes:

At 1015 hours this date, this RO received a phone call from Leo Simon. Mr. Simon stated that when he picked Mr. Stapleton up for work this date he didn't feel like Mr. Stapleton really felt like working. . . . Mr. Simon then stated when they got to Dodgeville it was raining so they sat in the truck a while and when it stopped Mr. Stapleton took some pictures and then didn't want to do anything else. . . . Mr. Simon then asked this RO if we could pick Mr. Stapleton up or if he could walk back. This RO began to ask a lot of questions, asking some of them 2-3 times b/c the whole situation was a bit confusing and Mr. Simon was giving real short answers. Mr. Simon was informed by this RO that Mr. Stapleton was not allowed to walk back to the facility and asked if he could [stay] on site until the end of the day. This RO also asked Mr. Simon to inform Mr. Stapleton that he is not allowed to walk back and to please call us if anything is resolved.

         At 10:26 a.m., Leo called back and said Stapleton was "walking over the hill." At 11 a.m., he called again to say a police officer had brought Stapleton back to the job site. At 11:27 a.m., he called a fourth time to report that Stapleton was "taking pictures again" and that "everything had worked out." At 1 p.m., Leo dropped Stapleton off at the work-release facility, and Huinker observed the pair seemed to be getting along and were laughing together. Stapleton informed her it "started over a chain" and that Leo called him a racial slur.

         The next day, Stapleton called Leo to pick him up for work. Leo told Stapleton that he did not need him anymore. Stapleton never worked for Simon Seeding again.

         Huinker received a complaint from another resident on May 6 about Leo's discriminatory behavior. Stephen Toliver had worked for Simon Seeding for one day when he told Huinker that Leo had called him a "nigger" several times. Toliver told Huinker he "realize[d] Mr. Simon [was] probably just used to saying things like that because he has been doing it for so long." He asked Leo to call him Steve. Leo requested that Toliver not be placed for work with him any longer because he did not think Toliver "was a very hard worker."

         Huinker discussed the complaints with Wendy Lyons, the work-release facility's residential manager. Neither Stapleton nor Toliver was disciplined for losing their jobs because they had alleged discrimination. On May 29, Lyons decided the facility would no longer place residents with Simon Seeding. Leo phoned Lyons to protest her decision and called back twice to say he was not racist and did not appreciate being called racist.

         B. The Complaint and Investigation.

         Stapleton filed his complaint with the DHRC on May 16, 2012. He alleged discrimination in violation of Dubuque City Ordinance 8-3-3, the city's counterpart to the ICRA. The DHRC sent the first of eight letters to Leo on May 25, requesting a formal response to the complaint and certain employment documentation. Leo failed to respond. Seven more letters went unanswered as the investigation continued over the next fourteen months. On November 15, 2013, the DHRC requested a subpoena for the employment documentation, including W-2s, copies of payroll records, and a list of employees. In December, the subpoena was served on Simon Seeding. By February 2014, no information had been received. The DHRC contacted Leo, who named his accountant. The accountant responded to the investigator's direct inquiry by providing the DHRC with Simon Seeding's payroll journal and tax information.

         The payroll listed the only employees in 2012 as Leo, John Berwanger, Frank Berwanger, and Jesse Weiland, without including Stapleton. The DHRC found a note dated April 3, 2012, at the work-release facility that stated Stapleton had been paid "for 40.5 hours of the week this date." The DHRC found there was probable cause to investigate.

         In February 2015, a public hearing was held before an administrative law judge and two commissioners (the panel). Stapleton, his mother, his ex-girlfriend, and Wendy Lyons testified on his behalf. Leo, Frank Berwanger, Greg James, Jody James, and Erica Wiles (other employees) testified for Simon Seeding.

         Stapleton testified he overheard Leo refer to him as "colored" or "chocolate" to Berwanger and others at the worksite. He testified about the impact Leo's statements had on him. He had been "happy-go-lucky, " "open-minded, " and "funny." But Leo's racial slurs changed his attitude:

Q. And did anything change after the series of remarks that you described to us earlier in your testimony?
A. I'd say a lot changed. I, you know, went from super high character to, you know, self-pity to just, you know, yelling at my girl, yelling at my mom, getting real irritable. There'd be nights in the halfway house where I'd just stay up all night, you know, just-I was struggling especially bad.

         Stapleton sought counseling to deal with his emotional difficulties. He attended one session but did not continue because he lacked insurance and could not afford it. Stapleton described Leo's effect on him as a "scar that never goes away."

         Stapleton's mother testified she noticed a change in him. They spoke daily by phone, and he kept her informed as to what Leo called him. She noticed that her son became depressed and agitated. She testified that Stapleton now lives with her in Minnesota, and he still talks about what Leo said and did. The incidents "bring[] back the feeling of destitution, of there's nothing I can do about it. Nobody cares about it." Stapleton's ex-girlfriend testified similarly, stating Stapleton would "lash out" and was not getting any sleep because of the way he was treated. On cross-examination, defense counsel raised Stapleton's history of drug abuse and residency in the halfway house. Defense counsel suggested those stressors caused Stapleton's depression and anxiety.

         Berwanger and Leo denied the incidents described by Stapleton. Berwanger testified he worked with Stapleton about "ninety percent" of the time, and he never heard Leo make any disparaging racial remarks. Berwanger did not believe there was "any truth to Mr. Stapleton's allegations." Greg James testified he is African-American and has a biracial family, and Leo has never given any indication of racist feelings. His wife, Jody James, testified similarly.

         Leo described the record keeping at Simon Seeding. He admitted there were some employees that were not on the payroll records, including Jody James and Stapleton:

Q. Okay. Are there some employees that would not have been accounted for by [the accountant]?
A. Right, and some of them, if they-you know, some only helped a half a day or a day or something or somebody would bring their buddy along; you know what I mean?
Q. And you wouldn't pay them through a payroll check, you'd just pay them on the spot?
A. Yeah, because that's what some of them wanted, same-day pay; you know what I mean?
. . . .
Q. Did you hear [Jody James] testify that she did work for you between March 15th and May 6th of 2012?
A. Right, and as you said, she wasn't always on the payroll. They had got gas for some wages and stuff like that was advantage to them. They weren't all on the payroll.
Q. And I don't see Jermaine Stapleton on this April 1st to June 30th period of time either. Didn't he work for you?
A. Right. He only worked a hundred and thirty-eight hours. He was not full time.
Q. So you paid a number of other people who aren't listed here for their services during that period of time; isn't that correct?
A. Not a ton of people, a few but not a ton.

         On March 30, the panel issued a proposed decision, finding Simon Seeding had engaged in prohibited racially discriminatory conduct. In determining whether Simon Seeding "regularly employed" four individuals to bring it within the ordinance, the panel defined that term to mean "at regular intervals." From the employer's tax and payroll documents, the panel determined,

For the weeks of March 18, 2012, March 25, 2012, April 1, 2012, April 8, 2012, April 29, 2012, May 20, 2012, and May 27, 2012, September 23, 2013, and September 30, 2012, Simon Seeding employed five employees. During the weeks of April 15, 2012 and April 22, 2012, Simon Seeding employed six employees. For the weeks of May 6, 2012, May 13, 2012, June 3, 2012, June 10, 2012, June 17, 2012, June 24, 2012, July 1, 2012, September 16, 2012, Simon Seeding employed four employees. Simon Seeding's records show Simon Seeding employed four or more employees for 19 weeks in 2012.

         The panel also questioned "the accuracy of Simon Seeding's payroll and tax records." The panel identified several individuals Simon Seeding admittedly employed but omitted from its payroll records. The panel found "Simon Seeding regularly employed four or more employees in 2012."

         The panel determined Leo had subjected Stapleton to a hostile work environment. It found, "Stapleton's testimony is reasonable and consistent with the other evidence the panel believes; Leo Simon's testimony is not." The panel also noted, "Stapleton made contemporaneous reports of Leo Simon's racial slurs to the work release facility, to his mother, and to his girlfriend." Leo initially denied using racial slurs, but later admitted he may have made them in a joking manner. The panel awarded $2817 in lost wages, $15, 000 in emotional distress damages, and $29, 400 in attorney fees. Both parties appealed.

         The DHRC affirmed the proposed decision by a vote of 6-1. The DHRC increased Stapleton's lost wages to $4500 by correcting the panel's math error. The DHRC tripled the emotional distress award to $45, 000, without explanation. The DHRC found the attorney fees claimed by Stapleton were not excessive, affirmed the $29, 400 fee award, and awarded an additional $1600 for the administrative appeal.

         Simon Seeding filed a petition for judicial review in district court. It argued it did not employ the requisite number of employees to be subject to the Dubuque ordinance and denied Stapleton's allegations of racial discrimination. It also contended the evidence was insufficient to award lost wages and emotional distress. The district court affirmed the DHRC's decision and awarded an additional $4500 in attorney fees for the judicial review.

         Simon Seeding appealed, and we retained the case.

         II. Standard of Review.

         "[F]inal decisions of municipal civil rights commissions [are] reviewable to the same extent as final decisions of the Iowa Civil Rights Commission (ICRC)." Palmer Coll. of Chiropractic v. Davenport Civil Rights Comm'n, 850 N.W.2d 326, 332 (Iowa 2014). Iowa Code section 17A.19(10) controls judicial review of an ICRC decision. Renda v. Iowa Civil Rights Comm'n, 784 N.W.2d 8, 10 (Iowa 2010). The burden of demonstrating invalidity of the agency action rests on the party asserting the invalidity. Iowa Code § 17A.19(8)(a) (2015).

         "[O]ur standard of review depends on the aspect of the agency's decision that forms the basis of the petition for judicial review." Burton v. Hilltop Care Ctr., 813 N.W.2d 250, 256 (Iowa 2012). "[A] reviewing court can only disturb . . . factual findings if they are 'not supported by substantial evidence in the record before the court when that record is reviewed as a whole.' " Id. (quoting Iowa Code § 17A.19(10)(f)).

"When that record is viewed as a whole" means that the adequacy of the evidence in the record before the court to support a particular finding of fact must be judged in light of all the relevant evidence in the record cited by any party that detracts from that finding as well as all of the relevant evidence in the record cited by any party that supports it, including any determinations of veracity by the presiding officer who personally observed the demeanor of the witnesses and the agency's explanation of why the relevant evidence in the record supports its material findings of fact.

Iowa Code § 17A.19(10)(f)(3) (second emphasis added).

         When reviewing an agency's interpretation of law, "[t]he level of deference afforded . . . depends on whether the authority to interpret that law has 'clearly been vested by a provision of law in the discretion of the agency.' " Burton, 813 N.W.2d at 256 (quoting Iowa Code § 17A.19(10)(c)). If the legislature did not clearly vest the agency with interpretive authority, we review for correction of errors at law. Iowa Code § 17A.19(10)(c). An agency has been "clearly vested" with interpretive authority only when we have a "firm conviction" that "the legislature actually intended . . . to delegate to the agency interpretive power with the binding force of law." Renda, 784 N.W.2d at 11 (quoting Arthur E. Bonfield, A ...

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