February 3, 2018

Agency Need Not Defer to ALJ; Roman Marblene Co., Inc. v. Baker

Category: Indiana Law Review | Author: | Share:

Most litigators know that the standard of review is really, really important when appealing a decision. The amount of deference the appellate body gives to the decision made below may control the outcome of the appeal. And there was apparently some confusion regarding the standard of review a state agency must apply in an appeal from an administrative law judge’s decision. The result? There is no deference.

Roman Marblene is a company in Corydon that manufactures molded bathroom fixtures. In 1999, company owner Bruce Hoese hired Baker, an African-American male to work in the factory. Roman Marblene was purchased by Triantos in 2005, after which Baker was the company’s only African-American employee. Baker was often subjected to racial slurs and harassment.

In December 2009, Baker was in an automobile accident, injured his hand, and was placed under a doctor’s care for a week. Roman Marblene was going to be shut down that week for the holidays, to reopen on January 4. On that day, Baker had a doctor’s appointment, and Triantos docked Baker one day’s pay for failing to call in sick in advance. Baker was the first salaried employee to be treated this way for failing to call in advance. Baker returned to work on January 5 and was able to perform all of his work assignments.

Baker learned that his pay had been docked on January 19 and protested this in writing to Triantos. Two days later, Triantos came into the work area and asked Baker to change the head of the spray gun. Baker replied that he could not work on the spray gun because another employee, whom he was training, was using it at the time. Triantos claimed that Baker refused to perform the requested task due to a medical restriction. Later that day, Triantos formally placed Baker on involuntary unpaid medical leave, and would not let Baker return to work, even though Baker had written medical clearance to do so. Triantos told Baker that he would not clear Baker to work unless he first saw all of Baker’s medical records.

Baker filed a complaint asserting racial discrimination with the EEOC, which was transferred to the ICRC. The matter was assigned to an ALJ, who held a two-day hearing. After that hearing, the AJL determined that Baker failed to meet his burden to establish that Roman Marblene discriminated against him on the basis of race.

Baker objected to this decision to the ICRC. After oral argument, the ICRC issued its own findings of fact and conclusions of law, determining that Baker met his burden of establishing that Roman Marblene discriminated against him on the basis of race, finding that Roman Marblene’s reasons for not letting Baker work were pretextual, and awarding Baker lost wages. Roman Marblene appealed.

On appeal, Roman Marblene’s arguments seemed to be premised on the belief that the ICRC was without authority to reweigh the evidence and disregard the proposed findings and conclusions of the ALJ. But the Court disagreed.

Throughout its brief on appeal, Roman Marblene appears to confuse the ICRC’s standard of review with that of a reviewing court such as this Court. Indeed, courts that review administrative determinations, at both the trial and the appellate level, review the record in the light most favorable to the administrative proceedings and are prohibited from reweighing the evidence or judging the credibility of witnesses. … No similar restriction is placed on the administrative agency, here the ICRC. It is well settled that administrative agencies can make findings on issues of credibility without taking live testimony, and moreover, the agency’s review board is the ultimate trier of fact and may weigh the evidence before it. As the agency charged with the responsibility and the authority to investigate complaints alleging discriminatory practices, the ICRC is the ultimate authority on whether a person has engaged in an unlawful discriminatory practice.

And while an agency like the ICRC “may, in its discretion, appoint or designate an ALJ to conduct a factfinding hearing,” this does not require that the agency accept the ALJ’s proposed findings and conclusions.

Rather, after an ALJ issues a proposed order, “the ultimate authority or its designee shall issue a final order: (1) affirming; (2) modifying; or (3) dissolving” the ALJ’s order.

Roman Marblene argued that this result conflicted with prior decisions, which had held that an agency erred by disregarding an ALJ’s credibility determinations. But the Court distinguished those cases by applying them narrowly.

We will, however, address and distinguish our opinion in Stanley v. Review Board of Department of Employment & Training Services. In Stanley, the agency review board reversed the referee’s ruling in favor of the employee/complainant based on a “paper review” of the proceedings below. On appeal, the complainant argued that his right to due process was violated because the review board, unlike the referee, did not have the opportunity to assess the demeanor of the witnesses. We agreed. We stressed, however, that “the sole determinative factor” in the case was the demeanor credibility of the witnesses, and we specifically limited our holding to the “extremely narrow” circumstances presented. Indeed, we emphasized that “if other determinative factors exist, the review board would then have an alternative adequate basis reflected in the record for its decision and any due process implications would constitute at most harmless error.”

Unlike in Stanley, demeanor credibility determinations were not the sole determinative factor involved in the ICRC’s decision here. The ICRC made thirty-five findings of fact, many of which involved undisputed facts as well as documentary evidence. Our review of the record reveals that the credibility of the witnesses was not the only basis from which the ICRC could draw its conclusion that Roman Marblene engaged in an unlawful discriminatory practice. We conclude that due process is not implicated here.

As the ICRC’s decision was supported by substantial evidence, and was not otherwise arbitrary, capricious, an abuse of discretion, or in excess of its statutory authority, the Court affirmed the ICRC’s decision.

Lesson:

Administrative agencies only need to defer to an ALJ’s credibility determinations if the issue of witness credibility is the sole determinative factor in a case.