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 
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 twentysix 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,4and 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).