Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca10-89-07075/USCOURTS-ca10-89-07075-0/pdf.json

Nature of Suit Code: 443
Nature of Suit: Civil Rights Accommodations
Cause of Action: 

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PUBLISH 

UNITED STATES COURT OF APPEALS 

TENTH CIRCUIT 

JEAN CARNES, 

Plaintiff-Appellee, 

v. 

RON PARKER, in his individual capacity, 

as Administrator of Choctaw Memorial 

Hospital, and as an agent and employee 

of Baptist Health Care Corporation; 

BAPTIST HEALTH CARE CORPORATION; 

CLAY PINSON; and WALTER HUFNAGLE, 

Defendants-Appellants, 

and 

) 

) 

) 

) 

) 

) 

) 

) 

) 

) 

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) 

) 

) 

) 

) 

) 

A.L. FOUNTAIN; ALVIN KING; NOEL PENCE; ) 

HOWARD TURNER, individually and in their) 

official capacity as members of the ) 

Board of Trustees of the Choctaw County-) 

City of Hugo Hospital Authority, their ) 

servants, agents, representatives, ) 

successors and assigns, ) 

Defendants. 

) 

) 

FIL1 1TID 

Unite<i $/;, f,:., G.: A ; y .I 

'l'erith clrctin, 

JAN 141991 

ROBERT L. HOEC::~tt 

Clerk 

No. 89-7075 

APPEAL FROM THE UNITED STATES DISTRICT COURT 

FOR THE EASTERN DISTRICT OF OKLAHOMA 

-(D.C. No. 88-92-C) 

Frank H. McCarthy (Mike Barkley, Barkley, Rodolf, Silva, McCarthy 

& Rodolf, Tulsa, Oklahoma, with him on the briefs), Barkley, 

Rodolf, Silva, McCarthy & Rodolf, Tulsa, Oklahoma, for the 

Defendants-Appellants. 

David L. Graven, Russell & Payne, Oklahoma City, Oklahoma, for the 

Plaintiff-Appellee. 

Before MOORE, TACHA, and BRORBY, Circuit Judges. 

TACHA, Circuit Judge. 

Appellate Case: 89-7075 Document: 010110016166 Date Filed: 01/14/1991 Page: 1 
Defendants-appellants Ron Parker, Baptist Health Care 

Corporation (Baptist Health), Clay Pinson, and Walter Hufnagle 

appeal a jury verdict in favor of plaintiff-appellee Jean Carnes 

in an action she brought under 42 u.s.c. § 1983. On appeal, the 

defendants argue the district court erred by: (1) overruling the 

defendants' motion for a directed verdict because Carnes does not 

have a property right in her continued employment under Oklahoma 

law, (2) overruling defendants Hufnagle and Pinson's motion for a 

directed verdict because there is no evidence of their involvement 

in the decision to terminate Carnes, and (3) refusing to instruct 

the jury not to award compensatory damages if Carnes would have 

been discharged had an adequate termination hearing been provided. 

The defendants also move to· certify to the Oklahoma Supreme Court 

the question whether Oklahoma law recognizes a property interest 

in continued employment under the facts of this case. We exercise 

jurisdiction under 28 U.S.C. § 1291, reverse the district court's 

denial of the defendants' motion for a directed verdict, and 

remand with instructions to the district court to enter a judgment 

consistent with this opinion. We dismiss as moot the motion for 

certification. 

The Choctaw Memorial Hospital (Hospital) is a public county 

hospital. All Hospital employees are considered employees of 

Baptist Health. Baptist Health contracted.with the Choctaw 

County/City of Hugo Hospital Authority (City/County Authority), a 

public trust established under Oklahoma law, to provide the 

Hospital with hospital management services. Carnes was employed 

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a~ a "permanent" radiology technician by Baptist Health at the 

Hospital. 

On March 11, 1986, Carnes had an argument with Marcia 

Rosenthal. Rosenthal was Carnes' immediate supervisor and 

director of the radiology department at the Hospital. Following 

the argument, Carnes left work despite Rosenthal's request for her 

to stay. 

That evening Rosenthal contacted Carnes and suggested they 

meet to settle the dispute. Carnes refused to speak with her. 

The next day Carnes did not show up for two scheduled procedures 

in her department. She met with the administrator of the 

Hospital, Ron Parker, who is also Rosenthal's supervisor. Parker 

promised to try to settle the dispute. He discussed the conflict 

with Rosenthal. Rosenthal told Parker she did not feel 

comfortable working with Carnes and no longer trusted her to 

fulfill her job responsibilities. Based on this discussion, 

Parker terminated Carnes for insubordination and failure to appear 

for work on March 12 as her work schedule required. 

After her termination, Carnes wrote a letter to the board of 

trustees and met with two board members, Walter Hufnagle and Clay 

Pinson. She later met with the entire board. Following the board 

meeting, Carnes discussed her dismissal with Parker and Rosenthal 

together. Rosenthal explained to Carnes she did not feel 

comfortable working with her and suggested Carnes take another 

position in the radiology department. Carnes refused. 

Grievance and discipline procedures are governed by the 

personnel manual the Hospital provides its employees. According 

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t~ this manual, insubordination is cause for immediate discharge. 

The manual further states that "[r]efusal to complete assigned 

schedule or walking off the job without approval of [an] immediate 

supervisor" may be punished by immediate discharge without warning 

after the first offense. An employee may also be discharged 

immediately for refusing to obey the orders of supervisory 

personnel, deliberately destroying or damaging hospital property, 

willfully falsifying an application for employment or other 

information requested by the hospital, and failing to report to 

work for two successive scheduled days without the approval of an 

immediate supervisor. The manual notes 11 [t]he Administration, 

Department Heads and supervisors may carry out disciplinary action 

towards an employee for just cause." 

The Hospital's personnel manual also establishes a formal, 

post-termination grievance procedure that allows an employee to 

investigate and contest any problem or grievance. The manual 

describes the purpose of the grievance procedure as follows: 

FAIR TREATMENT POLICY: 

The intent of the Fair Treatment Policy is to provide a 

means by which employees may take seemingly unfair workrelated problems to the attention of various levels of 

management needed to resolve such problems. 

Your supervisor, Department Head, or the Administrator 

is available to discuss work-related problems with you, 

including any questions you may have regarding 

interpretation of hospital policy. Most situations may 

be clarified by talking with your immediate supervisor. 

However, in the event you deem it necessary, the 

following formal procedure is available to you if a 

problem or grievance arises. There will be no 

discrimination or reprisal against any employee, past or 

present, because he or she has utilized the Fair 

Treatment Policy. 

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T~e procedure outlined in the manual provides three or four levels 

of review of an employee grievance, depending on the supervisory 

hierarchy within a particular department: 

I. FIRST STEP: Supervisor 

In order to minimize the possibility of 

misunderstanding, it is necessary to have an informal 

discussion of your grievance with your immediate 

supervisor within five working days after its occurence. 

The supervisor will investigate and evaluate the 

grievance and advise you of his or her determination 

within three working days of the initial discussion. 

II. SECOND STEP: Department Head 

If your grievance is not resolved to your satisfaction 

by your supervisor, you may appeal the matter in writing 

to your Department Head within five working days of your 

supervisor's decision. The Department Head will render 

a decision within three working days after receiving the 

appeal stating the pertinent facts revealed by his 

investigation and the reasons for his conclusion. 

III. THIRD STEP: Administration 

If your department's chain of command 

Assistant Administrator, proceed with 

otherwise, proceed with Step III-B.1 

includes the 

Step III-A; 

A. If your grievance is still not resolved to your 

satisfaction after your Department Head renders his 

conclusion, the matter may be appealed to the Assistant 

Administrator within five working days after the 

Department Head's decision. A meeting will be arranged 

with you, your supervisor and your Department Head 

within three days of receipt of the matter to review 

objectively the circumstances of the grievance. The 

Assistant Administrator will render a decision in 

writing within five working days after the meeting 

stating the pertinent facts revealed by his 

investigation and the resons [sic] for his conclusion. 

B. If the grievance is not resolved to your 

satisfaction by Step III-A, the matter may be appealed 

in writing to the Administrator within five working days 

1 We note the Hospital's radiology department is not under the 

supervision of an assistant administrator. Therefore, Carnes 

would have to proceed to Step III-B. 

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of the Assistant Administrator's decision. The 

Administrator will cause the matter to be thoroughly 

investigated by any persons he deems necessary. He will 

render his decision stating the pertinent facts revealed 

by his investigation, and the reasons for his 

conclusion. 

In addition to this grievance procedure, the manual states "[i]f 

the employee feels that he is still unfairly treated, he may 

request a meeting of the Personnel Committee of the Board of 

Trustees." 

The defendants contend Baker's termination of Carnes does not 

constitute state action as required by the Constitution and 

section 1983. We disagree. In deciding whether conduct of a 

private entity constitutes state action, we examine the structure 

of the entity and its relation to the government. Burton Y..!.. 

Wilmington Parking Auth., 365 U.S. 715, 722-23 (1961). We held in 

Milo Y..!.. Cushing Mun. Hosp., 861 F.2d 1194 (10th Cir. 1988), that 

conduct by a private entity that has contracted with a public 

trust to provide day-to-day hospital services for a public city 

hospital constitutes state action. Id. at 1195-97. 

The relationship between the government and the private actor 

in the present case is indistinguishable from the relationship 

between the government and private actor in Milo. Here, Baptist 

Health -- a private entity -- has contracted with the County/City 

Authority a public trust -- to provide hospital management 

services for the Hospital -- a public county hospital. Because 

the relationship between the government and Baptist Health is 

virtually identical to that in Milo, we hold the termination of 

Carnes by Parker in his capacity as a supervisory employee of 

Baptist Health constitutes state action. 

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Carnes contends the Hospital violated her constitutionally 

protected property interest in continued employment by terminating 

her without providing proper procedural safeguards. The 

procedural safeguards she claims were due and were not provided 

include: (1) a hearing before an impartial tribunal; (2) a 

meaningful opportunity to be heard in her own defense, to present 

evidence, and to confront the witnesses against her; and (3) 

presence of counsel. 

Carnes' federal constitutional claim depends on her having a 

property right in continued employment. Board of Regents Y..!.. Roth, 

408 U.S. 564, 576-78 (1972). If she in fact has such a right, 

then the government cannot deprive her of continued employment 

without procedural due process. Cleveland Bd. of Educ. Y..!.. 

Loudermill, 470 U.S. 532, 538 (1985). 

Property interests are not created by the due process clause 

of the Constitution. Roth, 408 U.S. at 577. Rather, they are 

created by independent sources such as a state or federal statute, 

a municipal charter or ordinance, or an implied or express 

contract. See,~, Bishop Y..!.. Wood, 426 U.S. 341, 344-45 (1976) 

(ordinance or implied contract may create a property interest in 

continued employment); Perry Y..!.. Sindermann, 408 U.S. 593, 600-02 

(1972) (written contract with explicit tenure provision creates 

property interest; contract "implied" from policies and practices 

of institution may create property interest); Melton Y..!.. City of 

Oklahoma, 879 F.2d 706, 718 n.15 (10th Cir.) (state statute, 

ordinance, or express or implied contract may create property 

interest), partial reh'g granted, 888 F.2d 724 (1989); Vinyard Y..!.. 

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Kingf 728 F.2d 428, 432 (10th Cir. 1984) (Vinyard II) (federal 

statute, city charter, or contract may create a property right); 

Poolaw Y.!.. City of Anadarko, 660 F.2d 459, 463 (10th Cir. 1981) 

(city charter may create property interest), cert. denied, 469 

U.S. 1108 (1985). 

A public employee has a property interest in continued 

employment if under state law that employee has a "legitimate 

claim of entitlement" to -- not merely a "unilateral expectation" 

of -- continued employment. See Roth, 408 U.S. at 577; see also 

Wood, 426 U.S. at 344-45. When an employee bases an expectation 

of continued employment on an employment contract, we rely on 

state contract law to determine whether there is a legitimate 

claim to continued employment under that contract. See Vinyard 

ll, 728 F.2d at 432. To ascertain whether Carnes is entitled to 

procedural due process we must determine whether the Oklahoma 

Supreme Court would find Carnes could rely on the policies and 

procedures contained in her employer's personnel manual to create 

a legitimate claim of entitlement to continued employment. 

Initially we note Oklahoma recognizes the employment at-will 

doctrine. In the absence of an implied or express agreement 

between the employer and its employees, the employer may terminate 

an employee at any time with or without cause. See Singh Y.!.. 

Cities Serv. Oil Co., 554 P.2d 1367, 1368-69 (Okla. 1976). The 

Oklahoma Supreme Court has refused to recognize an implied 

covenant of good faith.and fair dealing in employment at-will 

contracts. See Burk Y.!.. K-Mart Corp., 770 P.2d 24, 27 (Okla. 

1989). 

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Decisions by the Oklahoma appellate courts indicate the 

Oklahoma Supreme Court recognizes that the language of an 

employer's personnel manual may alter the employment at-will 

relationship between an employer and its employees. The Oklahoma 

Supreme Court acknowledged in Hinson Y.!. Cameron, 742 P.2d 549 

(Okla. 1987), that Oklahoma courts have recognized an employer's 

personnel manual can create a basis for a terminated employee's 

action for breach of contract. In the context of discussing the 

incorporation of an employer's policy statements into its 

employment contract with its employees, the court approved of 

Langdon Y.!. Saga Corp., 569 P.2d 524, 527-28 (Okla. App. 1976), 

where the Oklahoma Court of Appeals held a personnel manual was a 

contract defining the employer-employee relationship during the 

period the policy was in effect. 742 P.2d at 555. The court in 

Hinson noted the Langdon decision is consistent with another 

Oklahoma Supreme Court decision, Miller Y.!. Independent School 

Dist. No. 56, 609 P.2d 756, 759 (Okla. 1980), in which the court 

held a policy statement of the board of education had become part 

of a teacher's contract of employment. The Hinson decision, along 

with the Hinson court's discussion of Langdon and Miller, are 

clear indications the Oklahoma Supreme Court would recognize that 

the Hospital's personnel manual al tt:=1:·ed the employer-employee 

relationship between the Hospital and Carnes. 

We also are convinced the Oklahoma Supreme Court would find 

the Hospital's personnel manual altered the relationship between 

the Hospital and Carnes only to the extent that policies on which 

Carnes now relies are expressly stated in the manual. In Hinson, 

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t~e Oklahoma Supreme Court rejected the plaintiff's wrongful 

termination claim based on an implied contract theory because the 

manual said nothing that prevented the employer from terminating 

her without good cause. 742 P.2d at 555-56. The manual listed 

some grounds for termination including an unexcused absence from 

work, refusing to complete an assigned schedule, walking off the 

job without approval of an immediate supervisor, failing to follow 

a supervisor's instructions, and failing to follow office policy. 

Id. at 556 n.30. However, the court in Hinson refused to conclude 

the manual's list of reasons for termination indicated 12Y 

implication the hospital could terminate only for cause. Id. 

Thus, the court held the employee had no contractual basis to 

expect to be terminated only for good cause and he could be 

terminated at will by the hospital. Id. at 556-58. 

The Oklahoma Court of Appeals' decision in Breshears Y.!.. 

Moore, 792 P.2d 91 (Okla. App. 1990), supports our interpretation 

of Hinson. In Moore, the policy manual promised terminated 

employees a "termination order" setting forth the reasons for 

termination and an opportunity for a hearing. Id. at 93-94. The 

employee in Moore did not insist on any rights beyond those 

specifically noted in the written policy statement. Instead, she 

argued her employer did not follow the policy in the manual. Id. 

at 92. The court agreed with the employee, holding the employer 

had imposed a contractual duty on itself by adopting that policy. 

Id. at 93-94. The court held the policy on which the employee 

relied "expressly created a duty on the part of the employer to do 

certain things before discharging someone, even though Appellees 

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h~d the right to discharge an employee at any time or for any 

reason." Id. at 92. Thus, the procedures specified in the policy 

statement did not create a legitimate entitlement to continued 

employment, but the written policy did create a contractual right 

to the procedures themselves. Together, the Hinson and Moore 

decisions persuade us that Oklahoma law requires us to consider 

the express terms of an employment policy contained in a personnel 

manual -- nothing more, nothing less -- in determining whether 

Carnes has a property right protected by the due process clause. 

Here, the Hospital's personnel manual provides some grounds 

for termination as did the manual in Hinson. These grounds 

include insubordination, refusing to complete assigned schedule, 

walking off the job without the approval of an immediate 

supervisor, refusing to obey orders of supervisory personnel, and 

failing to report to work for two successive scheduled days 

without the approval of an immediate supervisor. The manual does 

not expressly state discharge is allowed only for cause. However, 

the manual notes "the Adminstration, Department Heads and 

supervisors may [emphasis added] carry out disciplinary action 

towards an employee for just cause." As the Oklahoma Supreme 

Court's holding in Hinson requires, we cannot imply from a list of 

grounds for termination or a simple reference to possible 

disciplinary action any contractual right promising continued 

employment. 

Moreover, the manual expressly indicates that an employee who 

violates certain provisions of the rules will be immediately 

terminated. The manual warns that "refusal to complete [an] 

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a~signed schedule or walking off the job without approval of [an] 

immediate supervisor" is a breach of the Hospital's rules and 

regulations that may result in immediate discharge without warning 

after the first offense. The manual later repeats that 

insubordination is cause for immediate discharge. The record 

indicates, and Carnes concedes, she was terminated for 

insubordination and failing to appear for work as her schedule 

required. Because the Hospital's personnel manual specifically 

tells employees they may be discharged immediately for either 

offense and makes no other promises about job tenure, we are 

convinced Carnes cannot claim the manual created a property right 

in continued employment. We hold as a matter of law that Carnes 

does not have a legitimate ·claim of entitlement to continued 

employment based on the Hospital's personnel manual. She has no 

property right protected by the fourteenth amendment and no basis 

for a section 1983 action. 

We are convinced, however, that Oklahoma courts would enforce 

Carnes' right to the grievance procedures outlined in the 

personnel manual as part of the employment contract between the 

Hospital and Carnes. See Moore, 792 F.2d at 93. Although 

procedural protections themselves are not sufficient to create a 

property interest in continued employment, they can sustain an 

entitlement to the procedures themselves. Vinyard II, 728 F.2d at 

432 n.15 (citing Asbill Y..!.. Housing Auth., 726 F.2d 1499, 1501-02 

(10th Cir. 1984)). 

The record indicates, and Carnes concedes, the Hospital 

provided her with the three-step procedure outlined in the Fair 

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Treatment Policy. Rosenthal, Carnes' immediate supervisor and the 

radiology department head, contacted her soon after their argument 

to suggest a meeting to settle the dispute. The fact Carnes 

refused to to speak with Rosenthal does not negate the Hospital's 

good faith attempt to offer Carnes steps one and two of the 

procedure. Carnes also met with the administrator of the 

Hospital, Ron Parker, thereby satisfying step three of the 

grievance procedure. Because the radiology department is not 

under the supervision of an assistant administrator, the possible 

fourth stage of the procedure does not apply. 

The Hospital went beyond the procedures in the manual by 

providing Carnes with further opportunties to resolve the dispute 

and remain a Hospital employee. Two members of the board of 

trustees met with Carnes and listened to her version of the 

conflict with Rosenthal. Carnes later presented the matter to the 

entire board of trustees. Carnes discussed her dismissal with 

Parker and Rosenthal together following the board meeting . 

• Rosenthal even offered Carnes another position in the radiology 

department. We are convinced the Hospital gave Carnes all the 

process to which she was entitled based on the personnel manual 

plus much more. Under the facts of this case, neither the 

fourteenth amendment due process clause nor the Hospital's 

employment manual offers Carnes any more procedural protection 

before or after termination than she received. 

Carnes contends our prior decision in Vinyard II recognizes a 

"general" property right in public employment that is 

constitutionally protected. We disagree. In Vinyard II, we noted 

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t~at "[i)n Oklahoma the provisions of an employee handbook can 

constitute a contract between the employer and employee and define 

the employer-employee relationship for as long as those provisions 

are in effect and the employee provides consideration for the 

benefits provided by the handbook." 728 F.2d at 432 (emphasis 

added). This statement of Oklahoma law is consistent with our 

holding today recognizing no basis for a property right in public 

employment based on an employer's personnel manual when that 

2 manual does not expressly promise discharge only for cause. 

Further, in Vinyard II we held the plaintiff was entitled to 

fourteenth amendment due process protections based on an 

employer's personnel manual that expressly stated a permanent 

employee "may not be discharged without cause." Id. Although we 

were able to conclude in Vinyard II the personnel manual promised 

discharge only for cause, we are convince the opposite result is 

warranted here because we cannot construe the manual as 

incorporating such a promise. 

Carnes also contends she has a legitimate claim of 

entitlement to continued employment based on a "general" property 

2 This interpretation of Oklahoma law is consistent with at 

least two of our decisions on closely related issues. In Poolaw 

Y.!.. City of Anadarko, 660 F.2d 459, 463 (10th Cir. 1981), cert. 

denied, 469 U.S. 1108 (1985), we held a city charter that 

specifically states a policeman may not be discharged without 

cause and establishes an independent review procedure gives a 

policeman a legitimate expectation of continued employment 

supporting a due process claim brought under section 1983. Also 

consistent with our view of Oklahoma law is our decision in Graham 

Y.!.. City of Oklahoma, 859 F.2d 142, 146 (10th Cir. 1988). In that 

case, we held a city charter expressly stating that "removals and 

demotions shall be made solely for the good of the service" and 

granting full discretion in employment matters to the city manager 

does not create a property interest in continued employment for 

city employees. 

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r~ght recognized by the Oklahoma Supreme Court during the 1930s in 

Nation Y-!.. Chisolm, 6 P.2d 766 (Okla. 1931). However, as we 

already pointed out in Vinyard Y-!.. King, 655 F.2d 1016, 1019 (10th 

Cir. 1981) (Vinyard X), "the very broad language of Nation that 

purports to recognize such a right in employment cases is at most 

dicta." (citing Taylor Y-!.. State ex rel. Rutherford, 291 P.2d 1033 

(Okla. 1955). 

We hold as a matter of law the Hospital did not violate 

Carnes' constitutional rights because she did not have a property 

interest in continued employment under Oklahoma law based on the 

Hospital's personnel manual. We REVERSE the district court's 

order on the motion for a directed verdict on the due process 

issue and do not address the merits of the defendants' other 

arguments. We also DISMISS as moot the motion for certification. 

We REMAND with instructions to the district court to enter a 

judgment consistent with this opinion. 

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