Case Title: Subhen Ghosh v. Indiana State Ethics Commission and Office of the Inspector General

Citation: 

Docket Number: 32S01-0910-CV-504

State: indiana

Court: Indiana Supreme Court

Date: 2010-06-30T00:00:00Z

Document:
ATTORNEYS FOR APPELLANT 
 
 
 
 
ATTORNEYS FOR APPELLEES 
Adam Lenkowsky 
 
 
 
 
 
Gregory F. Zoeller 
Steven Davis 
 
 
 
 
 
 
Attorney General of Indiana 
Indianapolis, Indiana 
 
 
 
 
 
 
 
 
Gary Damon Secrest 
 
 
 
 
 
 
 
 
Deputy Attorney General 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Frances Barrow 
 
 
 
 
 
 
 
 
Deputy Attorney General 
 
 
 
 
 
 
 
 
Indianapolis, Indiana 
 
 
 
 
 
 
 
______________________________________________________________________________ 
 
In the 
Indiana Supreme Court  
_________________________________ 
 
No. 32S01-0910-CV-504 
 
SUBHEN GHOSH, 
 
 
 
 
 
Appellant (Petitioner Below), 
 
v. 
 
INDIANA STATE ETHICS COMMISSION  
AND OFFICE OF THE INSPECTOR GENERAL, 
 
 
Appellees (Respondents Below). 
_________________________________ 
 
Appeal from the Hendricks Superior Court, No. 32D02-0707-MI-6 
The Honorable David H. Coleman, Judge 
_________________________________ 
 
On Petition to Transfer from the Indiana Court of Appeals, No. 32A01-0812-CV-601 
_________________________________ 
 
June 30, 2010 
Boehm, Justice. 
 
This case addresses the jurisdiction of state agencies and the State Employee Appeals 
Commission (SEAC) to consider ethics code violations in ruling on terminations of state 
employees.  A 2005 statute gave SEAC jurisdiction to review terminations of state employees by 
either the employee‟s agency or the Ethics Commission.  We hold that this amendment 
authorized SEAC to consider ethical violations among other grounds for termination in 
conducting this review, but did not otherwise affect the general rule that the Ethics Commission 
FILED
CLERK
of the supreme court,
court of appeals and
tax court
Jun 30 2010, 2:45 pm
2  
 
has exclusive jurisdiction to interpret the state Ethics Code.  Ghosh‟s attempt to review his 
termination by the Indiana Department of Environmental Management (IDEM) in this 
subsequent Ethics Commission proceeding is therefore barred by IDEM‟s earlier unappealed 
decision to terminate him.  We also uphold the Ethics Commission‟s sanction against Ghosh.  
Facts and Procedural History 
 
Subhen Ghosh was an Engineer with IDEM for over twenty years.  His work included 
conducting inspections and he maintained an office at his residence in Brownsburg as his “home 
base.”  He also owned an interest in a gas station in Beech Grove, Indiana, and was listed as the 
registered agent for Himalaya Mountain, LLC, the limited liability company that owned the 
station.   
 
Ghosh regularly drove a state-issued Jeep Cherokee from his home base to the counties 
northwest of Indianapolis where he conducted inspections.  Although Beech Grove was twenty-
six miles southeast of his home, Ghosh frequently visited the Beech Grove station in the 
Cherokee and purchased gasoline and other items from the gas station using his state-issued 
gasoline credit card.  On February 2, 2006, Ghosh was suspended pending termination of 
employment effective March 4, 2006.  IDEM‟s assistant commissioner explained that Ghosh was 
terminated because he “violated the State Ethics Policy by choosing to use [his] company 
Voyager credit card at the Beech Grove business for which [he is] a registered agent for 
Himalaya Mountain, LLC.”  Ghosh was terminated for cause on March 4, 2006.  
 
Ghosh appealed his termination to SEAC pursuant to Indiana Code section 4-15-2-34 
(2005).  An administrative law judge initially recommended that Ghosh be reinstated, but the full 
SEAC upheld the termination.  Ghosh attempted to seek judicial review of this decision but his 
application for judicial review was dismissed for failure to file the agency record timely.  See 
IDEM v. Ghosh, 2008 WL 638388, at *2 (Ind. Ct. App. Mar. 11, 2008).   
 
The Office of the Inspector General filed a separate complaint against Ghosh with the 
Indiana State Ethics Commission, alleging that Ghosh violated both the conflict of interest 
statute, I.C. § 4-2-6-9, and the misuse of state property provision of the Ethics Code, 42 Indiana 
Administrative Code § 1-5-12 (2005).  The Ethics Commission fined Ghosh $456.96 after 
3  
 
finding that he had violated the statute but not the misuse of property provision.  The amount of 
the fine was based on the mileage Ghosh drove from his home in Brownsburg to the Beech 
Grove gas station over a two-year period.   
 
Ghosh sought judicial review of the Ethics Commission ruling.  He challenged the 
finding that he violated the conflict of interest provision and the associated fine and also sought 
to revive his challenge to his termination, asserting that SEAC had no jurisdiction to affirm his 
dismissal.  The trial court denied Ghosh‟s petition for review, upholding the Ethics 
Commission‟s findings and holding that Ghosh was collaterally estopped from attacking his 
termination.  The Court of Appeals affirmed the trial court holding that Ghosh was collaterally 
estopped from challenging his termination.  The Court of Appeals also affirmed the Ethics 
Commission‟s determination that Ghosh violated the conflict of interest provision but found the 
amount of the fine was unsupported by sufficient evidence.  Ghosh v. Ind. State Ethics Comm‟n, 
911 N.E.2d 137, 148 (Ind. Ct. App. 2009).  We granted transfer. 
Standard of Review 
 
Courts have a limited power of judicial review over state agency action, pursuant to the 
Administrative Orders and Procedures Act.  LTV Steel Co. v. Griffin, 730 N.E.2d 1251, 1257 
(Ind. 2000).  A reviewing court may set aside an agency action only if it is: 
(1)  arbitrary, capricious, an abuse of discretion, or otherwise not in accordance 
with law; 
(2)  contrary to constitutional right, power, privilege, or immunity; 
(3)  in excess of statutory jurisdiction, authority, or limitations, or short of 
statutory right; 
(4)  without observance of procedure required by law; or 
(5)  unsupported by substantial evidence. 
I.C. § 4-21.5-5-14(d).   
 
The trial court concluded that Ghosh was collaterally estopped from seeking review of 
his termination.  Because this is a matter of law, we review it de novo.  See Ind. Dep‟t of Envtl. 
Mgmt. v. Raybestos Prods. Co., 897 N.E.2d 469, 473 (Ind. 2008).  The Ethics Commission‟s 
4  
 
determination that Ghosh violated the conflict of interest provision and its calculation of the 
associated fine is to be affirmed if supported by substantial evidence.  LTV Steel, 730 N.E.2d at 
1257. 
I.  Ghosh’s Termination from IDEM 
 
State merit employees may be terminated for cause by an “appointing authority, the 
appointing authority‟s designee, or the ethics commission.”  I.C. § 4-15-2-34.  An employee 
terminated by the appointing authority for cause may challenge that determination by filing a 
complaint, which must go through several levels of review, including a hearing with the 
appointing authority and review by the state personnel director.  I.C. § 4-15-2-35.  Employees 
who are not satisfied with the outcome of these procedures may appeal to SEAC, which is to 
hold a public hearing and render a timely decision.  I.C. § 4-15-2-35(b).  An employee 
terminated by the Ethics Commission must first petition the Ethics Commission to reconsider, 
then appeal to the SEAC with the same public hearing and timely decision requirements applied 
to terminations by the appointing authority.  I.C. § 4-15-2-35.5(b).1   
 
Both the trial court and the Court of Appeals held that Ghosh is collaterally estopped 
from seeking review of his termination by reason of his failure to perfect his petition for judicial 
review of SEAC‟s order affirming his termination.  See IDEM v. Ghosh, 2008 WL 638388, at 
*2.  Collateral estoppel “applies where a particular issue is adjudicated and then put in issue in a 
subsequent suit on a different cause of action between the same parties or their privies.”  
McClanahan v. Remington Freight Lines, Inc., 517 N.E.2d 390, 394 (Ind. 1988).   
 
One requirement for an agency ruling to be given collateral estoppel effect is that “the 
issues sought to be estopped were within the statutory jurisdiction of the agency.”  Id.  Ghosh 
argues that IDEM did not have the authority to terminate him “for cause” because the “cause” 
was an alleged violation of the Ethics Code, which is within the exclusive jurisdiction of the 
                                                 
1 Both statutes provide for binding arbitration if the employee is dissatisfied with the SEAC‟s decision.  I.C. §§ 4-
15-2-35(b), -35.5(i).  As the Court of Appeals noted, the arbitration provision of I.C. § 4-15-2-35 has been construed 
to cover situations when SEAC makes a recommendation that “is favorable to the employee on the merits, but the 
employee is dissatisfied with the remedy.”  911 N.E.2d at 143 n.6 (citing Rockville Training Ctr. v. Peschke, 450 
N.E.2d 90, 92 (Ind. Ct. App. 1983)).  Because the arbitration provisions in the two statutes are substantially similar, 
we agree with the Court of Appeals that arbitration is not a mandatory step in an employee‟s exhaustion of 
administrative remedies.   
5  
 
Ethics Commission.2  Ghosh cites LTV Steel, which held that the Ethics Commission has 
“exclusive jurisdiction . . . to adjudicate alleged violations” of the Ethics Code.3  730 N.E.2d at 
1258.  Because of the Ethics Commission‟s exclusive jurisdiction, Ghosh argues, IDEM had no 
authority to terminate him for a violation of the Ethics Code, and therefore SEAC had no 
jurisdiction to address the issue.   
 
The Court of Appeals agreed with Ghosh that LTV Steel would prevent IDEM from 
terminating an employee for an alleged ethical violation.  However, the Court of Appeals also 
found that IDEM had authority to terminate Ghosh because LTV Steel had been legislatively 
overruled by 2005 amendments to the State Personnel Act, which 1) authorized the Ethics 
Commission, in addition to the appointing authority, to terminate employees, and 2) mandated 
SEAC review of Ethics Commission terminations.  I.C. §§ 4-15-2-34, -35.5.  The Court of 
Appeals concluded that these amendments nullified LTV Steel‟s holding that the Ethics 
Commission is the sole body with authority to adjudicate disputes over alleged ethics violations.  
However, because SEAC has authority to hear appeals from all terminations, whether from the 
Ethics Commission or from the appointing authority, the Court of Appeals held that Ghosh‟s 
original appeal to SEAC adjudicated his claim.  911 N.E.2d at 145. 
 
Ghosh‟s argument would require the Ethics Commission to review any termination of a 
state employee when the basis for termination is an ethics violation.  The Ethics Commission 
also supports the view that it alone should review terminations to supply consistency and fairness 
to all employees.  That may be desirable policy, but the General Assembly has unequivocally 
                                                 
2 Both parties refer to the reason for Ghosh‟s termination as an ethics violation.  In a separate proceeding rejecting 
Ghosh‟s claim for unemployment benefits, the Court of Appeals, citing apparent discrepancies in Ghosh‟s claims for 
reimbursement of travel expenses, concluded that “IDEM did not discharge Ghosh for an Ethics Code violation.”  
Ghosh v. Review Bd. of Ind. Dep‟t of Workforce Dev., 2007 WL 1377728, at *5 (Ind. Ct. App. May 11, 2007). 
3 In LTV Steel, an inspector of a manufacturing plant found several serious violations of the Indiana Occupational 
Safety and Health Act (IOSHA).  LTV Steel, 730 N.E.2d at 1255.  At the time, the inspector was on layoff status as 
a union employee of a sister subsidiary of the manufacturer.  Id. at 1254.  As a union employee on layoff status, the 
inspector had recall rights of re-employment and had a vested pension from the sister.  Id.  When the inspector 
became aware of this potential conflict of interest, he notified officials of the manufacturer, who stated that they had 
no objection to his continued inspections of their facility.  Id. at 1255.  When IOSHA issued its safety orders, the 
manufacturer petitioned for review with the Safety Board and moved for summary judgment, claiming that the 
inspector‟s conflict of interest rendered his findings void.  Id.  The Safety Board agreed, and IOSHA sought judicial 
review.  Id. at 1256.  We reversed the Safety Board‟s decision, holding that the Safety Board had no jurisdiction to 
adjudicate the manufacturer‟s ethics complaint against IOSHA.  Id. at 1258.  We also held that even if an ethics 
violation had occurred, it would not warrant dismissal of the safety findings against the manufacturer.  Id. at 1260.   
6  
 
given agencies the authority to terminate their employees for “just cause.”  I.C. § 4-15-2-34.  To 
be sure, “just cause” or “cause” to terminate an employee often defies precision, at least at the 
margins.  See Roger I. Abrams & Dennis R. Nolan, Toward a Theory of “Just Cause” in 
Employee Discipline Cases, 1985 Duke L.J. 594, 599.  The State‟s Personnel Policy reflects this:  
“just cause” includes “violation of, or failure to comply with, Federal or State law, rules, 
executive order, policies or procedures; . . . dishonesty; . . . [and] actions which bring the agency 
or the individual into disrepute or impair the effectiveness of the agency or individual.”  State 
Pers. 
Dep‟t, 
Discipline 
Policy 
Statement 
(effective 
July 
1, 
2005), 
available 
at 
http://www.in.gov/spd/files/discpol.pdf.  Despite the room for debate as to what “just cause” may 
mean in some contexts, it is clear that some acts that constitute just cause for termination are also 
ethics violations.  For example, an employee who embezzles funds from a state agency is surely 
subject to termination for cause, and also violates the conflict of interest provision of the Ethics 
Code.  We agree with the Ethics Commission that “conduct that broadly implicates the Code of 
Ethics may also constitute „just cause‟ for dismissal.”  On the other hand, not every ethics 
violation is grounds for termination and some circumstances, for example incompetence, may be 
just cause for termination but do not constitute ethics violations.  The statute thus authorizes both 
the Ethics Commission and the appointing authority to address facts that constitute just case for 
termination and also establish a violation of the Ethics Code.   
 
Both parties argue that the 2005 amendment did not legislatively overrule LTV Steel‟s 
holding that the Ethics Commission has exclusive jurisdiction to adjudicate alleged ethics 
violations.  We agree.  Prior to 2005, only the appointing authority could terminate a state 
employee.  The 2005 amendments added termination to the available Ethics Commission 
sanctions, and gave SEAC the power to review the termination.  By providing for SEAC review 
of Ethics Commission rulings on termination, the statute in question permitted SEAC to review a 
finding of an ethics violation.  The amendment thus marginally affected the exclusive 
jurisdiction of the Ethics Commission by leaving the original jurisdiction in the Ethics 
Commission, but subjecting it to review by SEAC.  But it did not extend the jurisdiction over 
ethical issues to any other agency and for the most part left the Ethics Commission‟s exclusive 
jurisdiction intact.  
7  
 
 
In sum, IDEM had the authority to terminate Ghosh “for cause.”  That decision was 
reviewable by SEAC, and SEAC‟s ruling was subject to judicial review.  Ghosh therefore had a 
“fair opportunity to litigate” the issue of his termination and is collaterally estopped from seeking 
review of his termination.  McClanahan, 517 N.E.2d at 394. 
II.  Ethics Commission Finding and Sanction 
A. 
Conflict of Interest Violation 
 
The Ethics Commission found that Ghosh violated the Conflict of Economic Interests 
provision of the Ethics Code.  In relevant part, that section provides that “a state employee . . . 
may not participate in any decision” if the state employee knows that he or she has a “financial 
interest” in the matter.  I.C. § 4-2-6-9(a)(1).  Ghosh challenges the Ethics Commission‟s 
interpretation of the statute.  
 
Ghosh argues that “participate in any decision” necessarily implies that two or more 
people were involved in the decision.  Since he acted alone when he used his state credit card at 
his gas station, he contends, he was not participating in a decision.  The Ethics Commission 
counters that the statute‟s use of the word “participate” merely establishes the minimum degree 
of involvement in a decision required for application of the act.  We agree that “participate” 
embraces people who, for example, voted on a decision, but does not imply that the same 
decision by only one participant is not covered by the prohibition against acting as a state 
employee with a financial interest.  See Black‟s Law Dictionary 1229 (9th ed. 2009) (defining 
participation as “[t]he act of taking part in something, such as a partnership, a crime, or a trial”).  
“An interpretation of a statute by an administrative agency charged with the duty of enforcing 
the statute is entitled to great weight.”  LTV Steel, 730 N.E.2d at 1257; accord Lyng v. Payne, 
476 U.S. 926, 929 (1986) (“[A]n agency‟s construction of its own regulations is entitled to 
substantial deference.”); Ind. Dep‟t of Envtl. Mgmt. v. Steel Dynamics, Inc., 894 N.E.2d 271, 
274 (Ind. Ct. App. 2008), trans. denied (“[W]hen a court determines that an administrative 
agency's interpretation is reasonable, it should terminate its analysis and not address the 
reasonableness of the other party's interpretation.”).  Therefore, we must determine whether the 
Ethics Commission‟s interpretation of Indiana Code section 4-2-6-9(a)(1) was reasonable.  We 
cannot say, given these circumstances, that the Ethics Commission‟s finding was unreasonable.   
8  
 
B. 
Amount of the Fine 
 
The Ethics Commission arrived at a total penalty of $456.96 by applying the $0.34 
Internal Revenue Service mileage rate for personal use of a vehicle to the 1344 miles Ghosh 
drove on “unauthorized trips” between his home in Brownsburg and the Beech Grove gas 
station.  The Inspector General‟s complaint against Ghosh alleged violation of the conflict of 
interest statute and also personal use of state property in violation of the administrative Code of 
Ethics.  See 42 Ind. Admin. Code § 1-5-12.  The Court of Appeals held that the use of state 
property did not support the mileage based penalty because the Ethics Commission found that 
Ghosh‟s supervisor had approved the trips to Beech Grove, so Ghosh did not use state property 
without authority.  The Court of Appeals therefore concluded that the amount of the Ethics 
Commission‟s $456.96 sanction was unsupported by substantial evidence.  911 N.E.2d at 148.   
 
Despite the supervisor‟s authorization, we think the Ethics Commission was justified in 
imposing the penalty based on the conflict of interest statute, which allows a penalty “not to 
exceed three (3) times the value of any benefit received from the violation.”  I.C. § 4-2-6-12(1).  
Ghosh‟s travels in a state vehicle to Beech Grove were a benefit to him and the I.R.S. mileage 
guidelines were a reasonable means to monetize that benefit.  The Ethics Commission is entitled 
to considerable latitude in crafting a remedy,4 and the amount it fixed is within the statutory 
parameters.   
Conclusion 
 
The trial court‟s holdings that Ghosh is collaterally estopped from challenging his 
termination, that Ghosh violated the Ethics Code, and the $456.96 penalty are affirmed.  
Shepard, C.J., and Dickson, Sullivan, and Rucker, JJ, concur. 
                                                 
4 E.g., Sullivan v. Day, 681 N.E.2d 713, 716 (Ind. 1997) (an agency is entitled to great deference on judicial review 
for its interpretations of its own regulations).