Title: Chasson v. Community Action of Laramie County, Inc.

State: wyoming

Issuer: Wyoming Supreme Court

Document:

Chasson v. Community Action of Laramie County, Inc.1989 WY 27768 P.2d 572Case Number: 88-242Decided: 01/31/1989Supreme Court of Wyoming
LINDA 
CHASSON, APPELLANT (PLAINTIFF),

 
 
v.

 
 
COMMUNITY 
ACTION OF LARAMIE COUNTY, INC., A WYOMING CORPORATION, AND LINDA BURT, APPELLEES 
(DEFENDANTS).

 
 
Appeal from 
the District Court, LaramieCounty, Edward L. Grant, 
J.

 
 
Kathryn A. 
Jenkins of Kline & Buck, Cheyenne, for appellant.

 
 
Rodger 
McDaniel of Southeast Wyoming Law Offices, Cheyenne, for appellees.

 
 
Before CARDINE, C.J., MACY and GOLDEN, JJ., and 
RAPER and ROONEY, Ret. JJ.

 
 

RAPER, Justice, 
Retired.

 
 

[¶1.]     This is an employment 
termination case in which appellant alleged a contract of employment and related 
rights under federal regulations, deprivation of constitutional rights and 
interference with a contract. A motion to dismiss the complaint on the ground 
that it failed to state a cause of action under 42 U.S.C. § 1983 (1982) was 
sustained by the district court; the district court dismissed from the action 
two of appellee Community Action of Laramie County's (CALC) directors (Wisroth 
and Baldwin). An amended complaint was filed to which the appellees filed a 
motion for summary judgment alleging that appellant failed to state a cause of 
action for violation of her civil rights, failed to exhaust her administrative 
remedies and had no contractual rights under federal regulations. After 
consideration of properly filed materials, the district court sustained the 
motion.

 
 

[¶2.]     We will affirm the 
district court.

 
 

[¶3.]     Appellant sets out the 
issues as:

 
 
     A. Is the question of 
whether Linda Chasson was terminated for cause one of fact for a jury precluding 
summary judgment?

 
 
     B. Is Linda Chasson 
entitled to bring this action in a court of law although she did not request a 
hearing before the board of directors of CALC?

 
 
     C. Do the federal 
rules and regulations governing Head Start programs create a contract between 
Linda Chasson and CALC?

 
 
     D. Does Linda Chasson 
have a cause of action against Linda Burt, Sharon Wisroth and Jerry Baldwin in 
their individual capacities for intentional interference with contract or 
prospective economic advantage.

 
 
     E. Is the State's 
involvement with CALC sufficient to create a question of fact as to whether CALC 
acted under color of state law pursuant to 42 U.S.C. Section 
1983.

 
 

[¶4.]     Appellees see the 
issues to be:

 
 
     A. Can the affidavit 
of Appellant's attorney filed prior to the summary judgment hearing be 
considered in opposition to Appellees' motion for summary 
judgment?

 
 
     B. Can affidavits 
filed on behalf of Appellant after the summary judgment hearing be considered in 
opposition to Appellees' motion for summary judgment?

 
 
     C. Did the Defendants 
act under color of state law for purposes of stating a cause of action under 
Title 42 U.S.C. § 1983 within the facts of this case?

 
 
     D. Are Appellant's 
claims barred for the reason that she failed to exhaust available administrative 
remedies?

 
 
     E. Do federal 
regulations regarding parent participation in Head Start programs create 
contractual employment rights for the Appellant?

 
 
     F. Can a party to a 
contract be held liable under a theory of intentional interference with 
contractual rights.

 
 

[¶5.]     CALC is a private, 
non-profit corporation chartered under Wyoming law, which administers several federal 
programs. Overall direction of the corporation is vested in the Board of 
Directors of such corporation. The Head Start program was established by 
Congress to provide "comprehensive health, educational, nutritional, social, and 
other services to economically disadvantaged children and their families." 42 
U.S.C. § 9831(a) (1982). The United States Department of Health and Social 
Services is employed to grant appropriated funds to various agencies to 
administer the program locally. 42 U.S.C. § 9833 (1982). CALC has been the local 
agency grantee for Laramie 
County, Wyoming for over 
nineteen years. In the year that this case arose, CALC administered a grant of 
$220,000 for Head Start. Appellant was employed by CALC as Director of the Head 
Start program.

 
 

[¶6.]     Appellant was 
reprimanded in writing by the Board of Directors through the Director of CALC 
programs for failure to submit a timely budget, failure to properly complete a 
program evaluation, failure to involve the Policy Council in the budget process, 
staff conflicts and failure to assist in resolution of misunderstandings between 
CALC and the Policy Council.

 
 

[¶7.]     Afterwards, appellant 
was required to appear at a CALC board meeting to answer questions which were 
sent to her in a letter and directed to appear at an emergency meeting to 
discuss the problems. Appellant refused to meet because of "personal commitments 
that need my attendance." She instead sent her husband to the meeting to present 
a letter which did not appropriately respond to the Board's 
concerns.

 
 

[¶8.]     Following that 
incident, appellant was placed on probation for ninety days. Her performance did 
not improve. She had repeated unexcused and unexplained absences from work, 
failed to perform work in a timely manner, had continued budget overexpenditures 
(the second in a two-year period), and allowed a person not properly licensed to 
drive the Head Start school bus with children on board, which would have 
invalidated liability insurance coverage if an accident had 
occurred.

 
 

[¶9.]     After what appeared to 
be an unsuccessful probation, the Board requested appellant to resign; she 
refused. The Board then wrote a letter to the Policy Council requesting its 
consideration of appellant's discharge, which the Policy Council refused to 
consider and took no action on.

 
 

[¶10.]  Finally, the Board felt obligated to 
terminate appellant in view of the Board's fiscal responsibility and to protect 
the integrity of the Head Start program. Appellant was terminated on May 17, 
1985. 

 
 

[¶11.]  More facts will be set out as we move 
through the issues we consider as dispositive of the 
appeal.

 
 
I

 
 

[¶12.]  Appellant places stress on the fact that 
she considers this a breach of contract case. While CALC had entered into no 
written contract with appellant, we recognize that a right to continued 
employment can be created by statute, rules and regulations enacted pursuant to 
statute, or by rules and regulations having the force of a contract. Mobil Coal 
Producing, Inc. v. Parks, 704 P.2d 702 (Wyo. 
1985); Carlson v. Bratton, 681 P.2d 1333 (Wyo. 1984).1

 
 

[¶13.]  Appellant places primary, if not sole 
reliance on what is referred to throughout the record as "I-30," an appendix to 
regulations pertaining to the Head Start program which is a part of 45 C.F.R. § 
1304 (1986). Chart C graphically sets out the respective responsibilities of the 
Board of the Grantee Agency (appellee) and the Head Start Policy Council.2 In order to hire or fire the Head 
Start Director, general responsibility rests with the Board. The Board, 
Executive Director and the Policy Council must approve or disapprove before the 
action is taken and must have been consulted in the decision-making process. If 
the Council does not approve, the proposal cannot be adopted nor action taken 
until agreement is reached between the disagreeing groups, according to 
"I-30."

 
 

[¶14.]  If this regulation is read without 
reference to the genuine facts and circumstances disclosed in the record, then 
it would seem that reversal of the district court would be inevitable as far as 
the motion for summary judgment was concerned. An examination of such facts and 
circumstances indicates that there is reason to affirm. The rule of reason must 
prevail. We cannot blindly accept the application of a rule without examining 
all the surrounding circumstances. The fallacy in appellant's position is her 
refusal to look beyond the rule, a position obviously adopted by the Policy 
Council.

 
 

[¶15.]  There is no argument by appellant that 
the Policy Council, after the Board had made repeated unsuccessful attempts to 
involve the Council in the disciplining of the Director of Head Start chose not 
to become involved. The minutes of the Policy Council disclose agreement by the 
Policy Council to that effect. This impasse became irreconcilable. When it 
became obvious that the Policy Council would not participate, in desperation, 
the Board decided to, and for cause which we shall later discuss, discharge 
appellant.

 
 

[¶16.]  In a proceeding in the United States 
District Court for the District of Wyoming wherein CALC appealed the final 
decision of the Commissioners of the Administration of Children, Youth and 
Families terminating the Head Start program administered by CALC, some of the 
same questions we have before us were at issue. Order Denying Motion to Dismiss 
or for Summary Judgment, No. C86-0243-B, United States District Court for the 
District of Wyoming, dated and filed September 12, 1986. "Two issues are raised 
by the final decision," declared the United States Chief District Judge. "The 
first is whether CALC discharged the Head Start director in violation of the 
Head Start Act and its implementing regulations. The second is whether such a 
violation warrants termination of CALC's grant." We do not have the second issue 
before us, except in a peripheral way.

 
 

[¶17.]  Here, as in the federal case, that CALC 
violated the federal regulations is undisputed but as pointed out by the federal 
judge, "The decision overlooks a significant aspect of the statutory scheme." He 
went on to say: 

 
 

[¶18.]  The Commissioner correctly acknowledged 
Congress' concern that Head Start parents be intimately involved in the 
administration of Head Start Programs. See H.R.Rep. No. 93-1043, 93rd Cong., 2d 
Sess. (1974), reprinted in, 1974 U.S. Code Cong. & Ad.News 8048. The Court 
recognizes the importance of parental involvement in achieving the goals of the 
Head Start program. Congress, however, also wanted Head Start programs to be 
"free of taint." 42 U.S.C. § 9839(a).[3] See also 42 U.S.C. § 9836(a); 
H.R.Rep. No. 93-1043, supra, reprinted in 1974 U.S.Code Cong. & Ad. News 
8084-85. Here, the Commissioner failed to consider the overexpenditures caused 
by the Head Start director.

 
 

[¶19.]  An inherent tension exists between 
parental involvement in program decision making and the Head Start grantee's 
legal responsibility to administer the program in a fiscally responsible manner. 
Careful balancing is required lest this tension become a contradiction. Congress 
did not intend that one factor outweigh the other. Each must receive 
consideration, especially in a decision of the Commissioner terminating 
financial assistance to a Head Start grantee. Given the record of fiscal 
problems experienced by CALC and the Head Start program, penalizing the Board 
for attempting to manage the program responsibly is unreasonable. Further, the 
record indicates that the PC itself dealt with CALC in bad faith. The PC sought 
to supplant CALC as the grantee and possibly acted to undermine CALC's 
administration of Head Start. In these circumstances, the Commissioner's 
unyielding adherence to an otherwise beneficial regulation is unreasonable and 
leads to an absurd outcome.

 
 

[¶20.]  We are in accord with the United States 
Chief District Judge. His opinion is in accord with Wyoming law. The 
reasoning used in interpretation of statutes is applicable to rules made 
pursuant to statute. International Ass'n of Firefighters, Local No. 279 v. Civil 
Service Commission of Fire Department of City of Cheyenne, 702 P.2d 1294 (Wyo. 
1985). Statutes are not to be given a construction to produce absurd results, 
State v. Sodergren, 686 P.2d 521 (Wyo. 1984), nor are 
rules.

 
 

[¶21.]  The Board repeatedly appealed to the 
Policy Council to participate in conferences with the Board to consider the 
discharge of appellant before the Board finally, in desperation, took such 
action. The Board's communications, both written and oral, were ignored until 
the Board's termination of appellant was actually taken. This was not a case of 
a hasty decision by the Board but was a decision that took some seven months to 
evolve. The Board took progressive action with appellant in an effort to urge 
adequate performance of her duties: reprimand, probation, request for 
resignation and, ultimately, discharge. The Board acted reasonably, keeping in 
mind its responsibility for government funds and the integrity of the Head Start 
program.

 
 

[¶22.]  Under all the undisputed circumstances, 
we consider the action of the Board to have been reasonable and the inaction of 
the Policy Council as unreasonable. It is apparent that appellant exercised 
considerable influence with the Council and was antagonistic toward the Board. 
Her conduct somewhat mimicked that of the Council. She ignored pertinent 
questions directed to her by the Board with respect to the details of the Head 
Start program, the operation of which was her responsibility. She overexpended 
funds within her budget which the federal agency refused to approve and left the 
Board responsible for raising funds through private contributions, bake sales, 
rummage sales and the like. Past experience indicated that the most that could 
be expected in such activities was around $1,000. The deficit of over $3,000 was 
caused by appellant overexpending some $4,000, which was not the first time she 
had done so; she had overexpended the year previous, but in a smaller amount. 
This inept conduct is cause, though this employment had probably collapsed under 
the weight of the surrounding circumstances to an at will contract by the 
misconduct of the Policy Council and no cause was necessary, a view we prefer. 
Alexander v. Phillips Oil Co., 707 P.2d 1385 (Wyo. 1985).

 
 

[¶23.]  We also consider it serious that 
appellant was late in submitting the Head Start budget to the Board. The Policy 
Council refused to permit a budget item of over $1,000 for staff operation of 
CALC which required a figure closer to an allowance of $16,000 to $17,000 under 
applicable statute and regulation. This was part of the Policy Council's bad 
faith effort to oust CALC as the administering agency of Head Start and itself 
wrest control as the grantee agency. As such, this added to the turmoil and 
reinforced the absurdity of the situation. We understand the testimony of the 
chairman of the CALC Board when he declared that the Board was "held hostage by 
the Policy Council." Such immobility could never have been anticipated by 
Congress when it expressed a desire for parent participation in Head Start 
programs.

 
 
II

 
 

[¶24.]  42 U.S.C. § 1983 (1982) 
provides:

 
 
     Every person who, 
under color of any statute, ordinance, regulation, custom, or usage, of any 
State or Territory or the District of Columbia, subjects, or causes to be 
subjected, any citizen of the United States or other person within the 
jurisdiction thereof to the deprivation of any rights, privileges, or immunities 
secured by the Constitution and laws, shall be liable to the party injured in an 
action at law, suit in equity, or other proper proceeding for redress. For the 
purposes of this section, any Act of Congress applicable exclusively to the 
District of Columbia shall be considered to be 
a statute of the District of 
Columbia.

 
 

[¶25.]  Appellant asserts that she was deprived 
of her constitutional rights and that such deprivation took place under color of 
Wyoming state 
law. She cites Lugar v. Edmondson Oil Co., 457 U.S. 922, 102 S. Ct. 2744, 73 L. Ed. 2d 482 (1982) which lays out the following 
test:

 
 
First, the 
deprivation must be caused by the exercise of some right or privilege created by 
the State or by a rule of conduct imposed by the state or by a person for whom 
the State is responsible. * * * Second, the party charged with the deprivation 
must be a person who may fairly be said to be a state 
actor.

 
 
Lugar, 102 S. Ct.  at 2753-54.

 
 

[¶26.]  However, in Lugar, as pointed out by 
appellees' counsel, it was said:

 
 
     Petitioner presented 
three counts in his complaint. Count three was a pendent claim based on state 
tort law; counts one and two claimed violations of the Due Process Clause. Count 
two alleged that the deprivation of property resulted from respondents' 
"malicious, wanton, willful, opressive [sic], [and] unlawful acts." By 
"unlawful," petitioner apparently meant "unlawful under state law." To say this, 
however, is to say that the conduct of which petitioner complained could not be 
ascribed to any governmental decision; rather, respondents were acting contrary to the 
relevant policy articulated by the State. Nor did they have the authority of 
state officials to put the weight of the State behind their private 
decision, i.e., this case does not fall within the abuse of authority 
doctrine recognized in Monroe vs. Pape, 365 U.S. 167, 81 S. Ct. 473, 5 L. Ed. 2d 492 (1961). That respondents invoked the 
statute without the grounds to do so could in no way be attributed to a state 
rule or a state decision. Count two, therefore, does not state a cause of 
action under § 1983 but challenges only private action.

 
 
Id. 102 S. Ct.  at 2755 (emphasis added).

 
 

[¶27.]  By no stretch of the imagination can it 
be found that appellees, or any of them, were acting "under color of state law." 
CALC is a private, non-profit corporation, incorporated under the laws of the 
State of Wyoming. No person acting for the State of 
Wyoming has any control of CALC for the State 
of Wyoming or the County of Laramie.

 
 

[¶28.]  No implication of state involvement can 
be drawn from the fact that some members of the Board may be state or county 
employees. They are only appointed to such positions as a category of community 
representatives, not to act for the State, but only in their private 
capacity.

 
 

[¶29.]  Section 2790(d) of 42 U.S.C. authorizes a 
private corporation to be "[a] community action agency." It was also provided in 
§ 2791(b) of 42 U.S.C. "that each Board [of Directors] * * * shall consist of 
not more than fifty-one members and be constituted so that one-third of its 
members be elected public officials, if available and willing to serve, but 
their number could be substituted in such case by appointive public 
officials."

 
 

[¶30.]  The powers of the Board included power to 
appoint persons to senior staff positions, determine major personnel, fiscal and 
program policies, approve overall program plans and policies and approve 
proposals for financial assistance.

 
 

[¶31.]  After noting how the Supreme Court of the 
United States had approached the concept of governmental action, citing cases, 
the United States Tenth Circuit Court of Appeals in Gilmore v. Salt Lake 
Community Action Program, 710 F.2d 632, 635 (10th Cir. 1983) concluded 
that:

 
 
     These cases, taken 
together, impart at least two important principles. First, they recognize that 
power entrusted to the government by the people can ultimately be exercised 
through nominally private entities, be it through the government's delegation, 
compulsion, concerted action, or acquiescence. Second, they provide that when 
these nominally private parties exercise governmental power, they shall not 
exercise it insulated from constitutional constraints.

 
 
     The problem remains in 
distinguishing the exercise of governmental power from benign or tangential 
governmental involvement. This problem is resolved by "sifting facts and 
weighing circumstances" in each case. Burton v. 
Wilmington Parking Authority, 365 U.S. 715, 722, 81 S. Ct. 856, 860, 6 L. Ed. 2d 45 (1961).

 
 
The 
ultimate holding of the court in Gilmore was that:

 
 
     It is true that the 
personnel policies were formulated by a board of trustees partially composed of 
public officials; indeed, we considered the composition of the board highly 
relevant in our determination that SLCAP is a state actor. However, this 
characteristic of the board, standing alone, does not compel an inference that 
the personnel practices formulated by the board are the product of a state 
policy or decision. Although the public officials serve on the board as 
representatives of local government and as advocates of governmental objectives, 
there are no allegations that they represent or advocate a governmental position 
on personnel policy. Likewise, there is no indication that the Executive 
Director's decision to terminate Mr. Gilmore's employment in any way reflected a 
governmental policy or decision. Accordingly, we conclude that the appellant has 
failed to meet one of the two prongs of the Lugar test, and we hold that there 
is no state action in this case.

 
 

Id. at 
638.

 
 

[¶32.]  The involvement of the State of 
Wyoming with CALC is the same as the State of 
Utah with the 
Salt Lake City Community Action Corporation. There was no Wyoming state action in 
this case in the discharge of appellant.

 
 
III

 
 

[¶33.]  Since there was no state action by CALC, 
there can be no exposure to liability in that regard by appellees Linda Burt, 
Sharon Wisroth and Jerry Baldwin. Everything they did, as there have been 
alleged they did, was as representatives of CALC.

 
 

[¶34.]  Nor can there be any liability for 
damages personally by appellees Linda Burt, Sharon Wisroth or Jerry Baldwin by 
reason of any of their activities with respect to the appellant's discharge from 
employment. All their involvement was as representatives of CALC and not on 
their own in the expression of any personal vendetta against appellant. When 
Sharon Wisroth contacted various members of the Policy Council to encourage 
their participation in the consideration of appellant's termination acts, it was 
strictly as a member of the Board, not for any personal malice against 
appellant. When appellant refused to quit her job after discharge and would not 
leave the Head Start facility at Warren Air Force Base and appellee Burt and 
appellee Baldwin obtained assistance from the military police to revoke 
appellant's pass privileges to enter and leave the base, they were only 
enforcing and acting as agency director and Board president, respectively, to 
carry out the will of the Board of CALC, not for any personal 
purpose.

 
 

[¶35.]  Appellant's deposition recites that when 
appellant was asked what Mr. Baldwin did to damage her she responded, "[h]e 
approved my termination." "Q. Did he do anything else to damage you?" She 
answered, "No." When asked what he did to interfere with her contract, she 
responded, "He terminated my employment without the Policy Council's approval." 
When asked if he did anything else to interfere with the contract, she answered, 
"No."

 
 

[¶36.]  A similar line of questioning followed 
with respect to Sharon Wisroth:

 
 
     Q. * * * Are there any 
facts within your knowledge that led you to believe that she did those things 
for a private purpose?

 
 
     A. 
No.

 
 
* * * * * 
*

 
 
     Q. * * * do you have 
any reason to believe that she was doing those things for any other reason other 
than in her official capacity as a member of the board?

 
 
     A. 
No.

 
 
The same 
line of questioning took place with regard to Linda Burt. Appellant could supply 
no facts to lead her to believe Linda Burt was acting for her own private 
purpose, but was implementing what the Board was directing her to 
do.

 
 

[¶37.]  All parties to this lawsuit named as 
individuals should be dismissed pursuant to the clear terms of W.S. 
1-1-117:

 
 
     (a) In any action, 
whether in tort, contract or otherwise, in which the plaintiff seeks damages, a 
party may, in lieu of answering or otherwise pleading, file an affidavit 
certifying that he was not directly or indirectly involved in the occurrence or 
occurrences alleged in the action. If an affidavit is filed, the court shall 
order the dismissal of the claim against the certifying party, except as 
provided for in subsection (b) of this section. The affidavit shall be filed 
within the time required for filing an answer, if no answer is filed; and, in 
any event, at least twenty (20) days prior to trial. Any order of dismissal 
based on the affidavit shall not be entered within ten (10) days after the 
affidavit is filed.

 
 
     (b) Any party may 
oppose the dismissal or move to vacate the order of dismissal and reinstate the 
certifying party, provided he can show that the certifying party was directly or 
indirectly involved in the occurrence or occurrences alleged in the action. 
After the filing of an affidavit under this section, the party opposing the 
dismissal may have discovery with respect to the involvement or noninvolvement 
of the party filing the affidavit, provided the discovery is completed within 
sixty (60) days of the filing of the affidavit.

 
 

[¶38.]  Appellees Burt, Baldwin and Wisroth were 
clearly not acting in any individual capacity with respect to the termination of 
appellant as Director of the Head Start program but only to carry out the 
dictates of CALC through its Board of Directors. No showing was made by 
appellant that creates any question of fact to be tried following the filing of 
affidavits of non-participation, nor can such individuals be charged with the 
loss of, or interference with, appellant's contract if, indeed, there was a 
contract. All of the individually named defendants were agents, at the most, 
protecting the interests of CALC in all their allegedly wrongful misconduct. 
They were not strangers to any contract, if there was one between CALC and 
appellant. Kvenild v. Taylor, 594 P.2d 972, 977 
(Wyo. 1979); 
Restatement of Torts, Second, § 767(d) and (g), pp. 26-39; Prosser & Keaton, 
Torts, 5th Ed. 1984, p. 985. Such corporate officers were acting in a bona fide 
manner, having a responsibility to CALC, and their motives were not personal and 
no personal interests were involved. Their interest was for the public good and 
in the best interests of the public and students of the Head Start 
program.

 
 

[¶39.]  We decide this case on the merits and we 
see no need to decide any other issues that may have been raised. Pertinent 
facts are genuine, requiring no trial, as we see them. There are only questions 
of law. This was a proper case for summary judgment for CALC and dismissal as to 
individually named appellees. W.R.C.P. 56. No trial was 
necessary.

 
 

[¶40.]  AFFIRMED.

 
 
FOOTNOTES

 
 

1 Wyoming follows the rule 
that either party may terminate an employment "at will" contract for any reason 
or without reason and is not violative of any implied covenant of good faith or 
fair dealing. Mobil Coal Producing, Inc., 704 P.2d  at 704.

 
 

2 The Policy Council is 
a formal structure by which parents participate in policy making and operation 
of the Head Start program. It is made up of fifty percent parents of Head Start 
children enrolled in that grantee's program plus representatives of the 
community. B1-Introduction to I-30 Concerning Role of the 
Parents.

 
 

3 42 U.S.C. § 9839 
(1982) reads in pertinent part:

 
 
     Each Head Start agency 
shall observe standards of organization, management, and administration which 
will assure, so far as reasonably possible, that all program activities are 
conducted in a manner consistent with the purposes of this subchapter and the 
objective of providing assistance effectively, efficiently, and free of any 
taint of partisan political bias or personal or family favoritism. * * * Each 
such agency shall adopt for itself and other agencies using funds or exercising 
authority for which it is responsible, rules designed to * * * (2) assure that 
only persons capable of discharging their duties with competence and integrity 
are employed * * *.