# FILED
July 2, 1997 Cecil W. Crowson Ap pellate Cou rt Clerk JOE E. ARMSTR ONG, ) ) Petitioner/Appe llee, ) ) Appeal No. ) 01-A-01-9610- CH-00476 VS. ) ) Davidson Chancery ) No. 95-1996-II I TENNESSEE DEPARTMENT OF ) VETERANS AFFAI RS, COMMI SSIONER ) FRED TUCKER

in his official capacity as ) Commissioner of the Tennessee Department ) of Veteran Affairs, TENN ESSEE CIVIL ) SERVICE COM MISSION and ELE ANOR ) E. YOAKUM , in her official capacity as ) Secretary of the Tenne ssee Civil Service ) Commissioner, ) ) Respondents/Appe llants. )

COURT OF APPE ALS OF TENNESSEE MIDDLE SEC TION AT NASHVILLE APPEALE D FRO M THE C HANC ERY C OURT O F DAVI DSON COUN TY AT NASHVILLE, TENN ESSEE THE HONORABLE ROBERT S. BRA NDT, CHANC ELLOR

PETER M. OLSON OLSON & OLSON, PLC 114 Franklin Street Clarksv ille, TN 37040 Attorney for Petitioner/Appe llee JOHN KNOX WALK UP Attorney Gen eral and Repor ter JAMES C. FL OYD Assistant Att orney Gener al 450 James Roberts on Parkway Nashvil le, TN 37243-0490 Attorney for Respondents/Appel lants

AFFIRMED AND REMAN DED

BEN H. CAN TRELL, JUDGE CONCUR: TODD, P.J., M .S. WELLES, J.- 2 - 

## O P I N I O N

The question i n this case i s whether a state employee protected by civil service has a right to be hear d bef ore b eing r ecla ssif ied t o the unpr otec ted e xecut ive service

. The Chancery Court of Dav idson County held that the employee had a r ight to gr ievethe re class ificat ion. We affirm.

I.

The appellee, Joe E. Armstrong, was ini tially hired at the Tenness ee Departm ent of Veteran Affairs ("TD VA") in May of 1989 in the posit ion o f Adm inist rative ServiceAssistant 1, an executiv e position. In the Springof 1994, by which timeMr. Armstro ng h ad be en pr omot ed tothe p osi tion of A dministrat ive Assistant

4, he wasinformed thathis employ ment status would be transferred from
execu tive to career s ervice. W . D. Manni ng, the Commissione r of the TDVA at the time, made a wri tten req uest fo r such a chang e "due to a change in the reporti ng relationshi p." He wr

ote that "[p]rio r to September 20, 1993 [Mr. Armstrong's position along wi th one other] re ported direct ly to me" but that they

currently

were "re porting t o Administrati ve Serv ices Assistant 5." The State D epartment of Personne l approved Mr. Manning's request by a letter dated March 10, 1994 w hich stated that t he approval w

as "based upon the i nformation [TDVA] staff provided th at thes e positions, which had previousl y reported to an [sic] Commissioner, now repor t to the Director of Administrativ e Servic es (Administr

ative [S]er

vices As sistant 5)."

With a change of administrati on, Fr ed Tucker became theCommiss ione r o f the TDVA on January 21, 1995. On Februar y 9, 1995, M r. Tucker w rote a letter requesting that the class ification of t hree positions including Mr. Armstr

ong's be changed to exe cuti ve status as "the reporting relationship of these three positi ons has- 3 -

been chan ged to repo rt directl y to me." On F ebruary 22, 1995, Tennessee Departmen t of Personnel Commis sioner, Susan William s, reclassified Mr. Armstro ng' s position from career ser vice to executive se rvice status. Onlytwo days followin g the reclassification of Mr. Armstr ong's posit ion, on Februar y 24, 1995, M r. Tucker terminated Mr . Armstrong from this posit ion.

In a letter dated March 15, 1995, Mr. Tu cker denie d M r. Armstrong's request for a griev

ance hearing stati ng th at the procedure s grantingemployees the
r ight to grieve apply only to employees in career s ervices . Mr. Armstrong then obtained counsel and re quested a Level V hearing before the Commission i n a letter dated April 11, 199 5. On April 27, 1995, Ms. Williams, as secretary

of the Commission sent Mr. Armstr ong a letter

stating that because he "was an employee occupying an ex ecutiv e servic e position [under Tenn. Code Ann. § 8- 30-208(b)(5) ], the [Com miss ion] lack[ ed] s tatu tory a utho rity t o hear his grievance concerning his dismissal." Mr. Armst rong then filed this petition in C hancery C ourt claimin g thatthe reclassification of his job and subsequent te rmination from this jobdiveste d hi m of a constitutionally protected property right and thereb y deprived him of due process.

II.

The facts o f this case mu st b e view ed with an u nderstanding of the Tennessee Civil ServiceCode whic h divides all positi ons in the state servic e between
career servic e and executi ve serv ice. Tenn. Code Ann § 8-3 0-208 (1993); see also § 8-30-101(a) (23) (Supp. 1996) (defining "[s]tate serv ice" as "all officers and positions of trust or empl oyment in theservice of state government in the executive br anch and all boards, commissions and agenciesin state government" with certain exceptions). Generallyspeaking, executive service employees are those in higher level managementand administrat ive posit ions. Id. § 8-30-208(b); see also Op. Att'y Gen. 95- 088 (Ten n. 1995). Among those positio ns designated for executive service are- 4 -

specific positions fully defined by the titles of the positions such as "[m]em bers o f boards, commissions, agencies and a uthorities an d the chief exec utive officer of each board, commission, ag ency and author ity and the commissioner of eac h department." Ten n. Code An n. § 8-30-208(b )(1). The executive se rvice al so includes po sitions which are not defined by the particula r job's title but by the job's descript ion. An example is the category of execu tive servic e into whi ch the appellee' s position was classified which i nclu des "[a]ny pos ition serv ing in a confidential administrative o r program management capaci ty to a commis sioner, deputy commissioner, assistant commissioner

or equiv

alent authority ." Id. § 8-30 -208( b)(5) . All regu lar ful l-ti me positionsin state ser

vice w hich are not designated as executi ve serv ice in Secti on 8-30-208(b) are in the career serv ice. Id. § 8-30-208(c).

Career service employees w ho have complet ed their ini tial wor king test periods are called "r

egular employees" and they ar e given certain prot ections under the Civil S er vice Code. See id. § 8-30-101(a) (20) (Supp. 19 96) (defining "regular employee"). Section 8-30-328 sets up a grievance procedure f or regular employees. Moreover, while executive se rvice empl oyees serv e at the pleasure of their employer, Tenn. Dep't of Personnel R. § 1120-10- .02, a regular employee in the career service acquiresa property

right i n th at p osition. Tenn. Code Ann . § 8-30-331(a) (1993). With such a right, " no suspension, demo tion, dismissal or any other action which deprivesa regular

employee of su ch em ploye e's p rope rty righ t will b ecom e ef fec tive until minimum due process is provided." Id. § 8-30-331(a) . The statute prov ides that minimum due process i ncludes wr itten notice of the char ges and the opportunity to respond to these charg es be for e any action is taken. Id. § 8-30-331(b) (1)-(2) . The statute states that

the employee's opportunity to respond "shall be for the purpose of allowingthe employee t o present informati on to the ma nager reg arding the disciplina ry acti on under consider ation." Id. § 8-30-331(b) (4).- 5 - In this case the trial court base d its decision on the Tennessee Department of Person nel Rules on D isciplinar y Actions which contain simila r languag e to the code with respect to minimum du e process. Rule 1120-10-. 03(1) s tates that "[c]areer employees have a 'property right' to a position in the classification in which they currently hold career stat us. Therefore, nosuspension, demoti on, dismissal or any other action w hich deprives a regula r (career ) employee of

his propert

yright will become effective until minimum due proces s is prov ide d a s outlined below." Like Section 8-30-331(b) of the Te nnessee Code, the Depa rtment rules pro vi de that minimum due process

mandates wr itten notificati on to the employ ee of the charges against him as wel l as the opportunity for the employee to answer t hese charges and presentinformation which mi ght influence th e decision. Tenn. Dep't of Personnel R. 112 0-10-.0 3(2). See

Tenn. Code Ann. § 8- 30-205 (1993) ( providingthat the rules adopted by the commissioner to carry out the provisions of the civil service code "shall have the force an d effect of law").

III.

The Fourteenth Amendment t o the United Stat es Constitutio n protects individuals against government deprivations of "life , liberty or p ropert y wi thout due process of law." U.S. Const. amend. XIV, § 1. In a du e process case, the court fol lows a n esta blished two-step analyses determinin g whether the plaintiff was deprived of a protected int erest and, if so, what proc ess is due. R owe v. Board of Educ. of Chattanooga, 938 S.W.2d 351, 354 (Tenn. 1996), cert. d enied , 117 S. Ct. 1271 (1997) (ci ting Board of Regents of St

ate Colleges v

. Roth , 408 U.S. 564, 569-70, 92 S. Ct. 2701, 2705, 33 L. Ed. 2d 548(1972)). The case before us focusses on the first question, specifically whether Mr. Armstrong had a constitutiona lly protect e d property i nterest in hi s job giv ing ris e to due process protection.- 6 - "Property

interests ar

e not created by

the federal consti tution. Instead, they are created and defined 'by ex isting r ules or understandings that stem from an independentsource such as state law.'" Rowe , 938 S. W .2d at 3 54 (citin g Roth , 408 U.S. at 577, 92 S. Ct. at 2709). Th e United States S upreme Co urt has stated that "[t]he hallmark of prop erty . . . is an indi vidual enti tlementgrounded in state law, which cannot be removed except 'for cause.' " Logan v. Zimmerman Brus h C o. , 455 U.S. 422, 430, 102 S. Ct. 1148, 1155, 71 L . Ed. 2d 265 ( 1982). As stat ed above, Tennessee law gives certain civil service emplo yees a constitutional ly protec ted property interest in continued emplo yment which cannot be extingu ished unless t he employeesare afforded pro cedural due process. See Tenn. Code Ann. § 8- 30-331 (1993); Tenn. Dep't of Personnel R.1120-10-.03(1).

It is not disputed that once Mr. Armstrong beca me a career employee in March of 1994, he satisfacto rily complete d his i nitial probat ionary per iod under the administrat ion of the former Commissi oner of TDVA, and thus became a regul ar employee with a pr

operty int erest in his

employment. See

Tenn. Code Ann. § 8-30- 331; § 8-30-312 ( provides for probationary period of at least 3 months). As a regul ar employee, the law clearly provides that Mr. Armst rong c ould not be deprived of his property right by "su s pension, demotion , dismissal or any other action " without minimum due process. Id. § 8-30-331( emph asis added). The question beco mes whether the recla ss ification from career to exec utive ser vice constitutes "any

other action" thereby tr iggeri ng the minimum due process prot ections of Sectio n 8-30-331. The lower court answer ed this ques tion in the affirmati ve observ ing that the langu age "any other action" i s exceeding ly broad. We agree. Reclassification of an employe e from the career s ervice t o the execut i ve serv ice is just as much a depri vation of property as suspension, demotion, or di smissal . Indeed, as Mr. Armstrong's case illustrates, recl assifi catio n mi ght immediately pre cede termination and thereby provide the state with a means of eff ecting suspension, demotio n, or dismissal w ithout the burden of providing due process.- 7 - Moreover, with no me ans t o revie w the re clas sifi cati on of execu tive service employees, the state can arbitrarily determine w hich employee s will lose their protected civil service status. As the trial cour t noted, it "req uires the exercise of
some discretion to decide w hether a state empl oyee falls w ithin" the categ ory of
execu tive servic e (Tenn. Code Ann. § 8-30-29( 5)) into w hich Mr. Ar mstrong was classified. "To hold [that reclassi fication does not trigger minimum due process] would completely eliminate rea l civi l servi ce protection for many, if not most, career service employees. The a ppo inti ng au thor ity, for whatever reason, pol itical or otherwis e, c ould si mply recl assify a posi tion and terminat e the employee." This court has recogniz ed that the due process cl ause was "i ntended to secure the i ndividual from the arbitrar

y exercise of the pow ers of gove rnment." Lee v. Ladd , 834 S.W.2d 323, 325 (Tenn. App. 19 92) (quot ing Dani els v. Will iams , 474 U.S. 327, 331 , 106 S. Ct. 662, 665, 88 L. Ed. 2d 662, 668 (1986))

.

We recogniz e that in both thestatute a nd the Department r ule, the process that is due i s articulat ed in the contex t of discipli nary proc edures against an employee. Th ough "su spension, demotion , dismissal or any other action which deprivesa regular employee of such em ployee's 'property right'" might occur most often as a consequence of disciplinar y procedures, the statute does not require t hat the employee's loss be the result of discipline . Tenn. Code Ann. § 8-30 -331(a). Ra ther, the statute cl early cr eates a property

right w ithout quali fication to al l "'[e]mployees

who have success fully complet ed their probat ionary per iod" and
ensures due process for "any . . . ac tion" whic h de prives them of their proper ty interest. Id.

In holding that the reclass ification of

an employee's

position from career service to executi ve serv ice requi res that the empl oyee recei ve notice an d the opportunity

to respo nd, we ackn owledge th at the le gislature has gi ven the Commissioner

of the Tennessee Depart men t of Personnel the d uty to assi gn the- 8 -

positionsin the state s ervice w hich are not s pecifically identified as career or execu tive servic e. Tenn. Code Ann. § 8-30-208(d). The statute prov ides that"[s]uch determination shall be bas ed solely on duties, respons ibilities and reporting relationshi ps and shall not be subje ct to rev iew through an y procedure ." Id. (emphasis added). To the extent t hat this statut e cannot be reconc iled with the statecreated property interest in e mploy ment possessed by a Tenn essee career service employee, we find that i t is inadeq uate as a matter of co nstitutional law. In addressing the nature of constit utional due proc ess, the Unit ed States Supreme Court stated that because "'minimum [procedu ral] requirements [are] a matter of federal law, they are not diminished by

the fact that the Stat e may have specified its own procedur es that it may deem adequate for deter mining the preconditi ons to adver se official acti on'. .

. . Indeed, any other conclusion would allow the State todestroy at will virtual ly any state-created property interest." Logan v. Zimm erman Br ush Co. , 455 U.S. 422, 102 S. Ct. 1148, 71 L. E d. 2d 265 (198 2) (quotin g Vitek v. Jones , 445 U.S. 480, 491, 100 S. Ct. 1254, 1263, 63 L. Ed. 2d 552 (19 80)).

The holding i n Logan is instruc tive. There , t he state of Illi nois had established a comprehensi ve scheme for adjudicating alle gations of employ ment discriminat ion. Logan , 455 U.S. at 422. After being di scharged from the defendant employer, the plaintiff filed a charge w ith the Illi nois Fair Employment Prac tices Commission which tr iggered the Commission' s statutory obligatio n to convene a factfinding conference wi thin 120 days

. Id. at 426. However, by no fault of the plaintiff's, the Comm issio n's re pres enta tive scheduled the conf erence for a date five day s after the expirati on of the statutory period. Id. Finding the legis lative l anguage w ith regard to scheduling a conference w ithin 120 days t o be m and ator y, the state supreme court held that the failure t o com ply wi th this lang uage deprived the Commissio n of jurisdict ion to hear the plaintiff's charge. Id. at 427. In a deci sion which reversed the state court, the Supreme Court asserted that "'[w]hil e the legislature may ele ct not to confer a property interest, . . . it may not constitutionally authorize the deprivation of- 9 -

such an interest, once conferred, w ithout appropri ate procedural safeguards.'" Id. at 432 (quoting Vitek

, 445 U.S. at 490- 91, n.6, 100 S. Ct

. at 1262 -62, n.6 ) (quoting Arnett
v. Kennedy

, 416 U.S. 134, 167 , 94 S. Ct. 1633, 1650, 40 L . Ed. 2d 15 (1974)). Thus, while the General Asse mbly of T ennessee can comple tely do away wi th the constitutional ly-prot ected interest i n continued employ ment for the state's civil service regular employees, i t cannot establi sh a syste m where thes e employeescan b e arbitrarilydeprived of their interest by reclassification without due process protection.

We hold that Mr . Armstrong , a s a re gular employee with a pr operty interest in his posi tion, had a ri ght to proced ural due process upon the reclassi fication of his po sitio n to e xecut ive servic e. In addition, he was enti tled to use thegrievance proceduresestabli shed by th e legi sl ature for reg ular employ ees. Tenn. Code Ann. § 8-30-328 (1993) (gri e vance proce dures); § 8- 30-331(c) ( stating that "[t]he commission shall determi ne as a preli minary matter to the merits of a grievance, a grievant's allegation of denial o f min imum due process") . We stress that it is t he reclassification of a career serv ice emp loyee to executive se rvice t hat requires due process and not th e termination of an executive se rvice empl oyee, for the l aw explicitly provides

that executi ve serv ice employees serve at th e pleasure of their employers. The nature of Mr. Armstrong's grievance or complaint m ust be that his position ha s been wron g ly assigned to the executive service. If it is ultimately determined that Mr. Armstrong's duties correspond to those of an executive empl oyee as outlined in Section 8-30-29 and that his reassignment was pro per, then he will loose his property right in his position. If, on the other hand , it is determined that his duties do not p lace h im w ithi n the scope of exe cutive ser vice, he i s entitled "to be reinstated or

made whole or

both" pursuant to Section 8-30- 328(e).

Las tly, we address appell ant's contentio n that there is no legal foundation for this appeal. Appellant cl aims that t his was not a "contested ca se" within the cha ncer y cour t's re view au thor ity un der t he Un ifo rm Ad mini stra tive- 10 -

ProceduresAct ("UAPA") which provides that "[a] person who is ag grieved by a final decision in a contested case is entitled to judicial review under this c hapter." Tenn. Code Ann. § 4-5-322(a) (Supp. 1996 ). As stated, w ith regar d to the UAPA, the trial court concluded "that t he decision not to hold a con tested case hear ing is subject to judicial review

just as if a contested case hear ing were hel d." The court rea soned that "[j ]udicial review would be meaningless if it could be avoided by simply refusi ng t o hold a contested case hearing

. More import antly, if a pa rty has a right to a contested case hearing and is denied one , precluding judicial review o f th e den ial wou ld lea ve the party wit h no judic ial redres s of an obvious violatio n of the party' s right t o a hearing."

In support of its contention that the UAPA is inap plicable, appellant relie s upon Mid-South Indoor Horse Racing, Inc. v. Tennessee State Racing Comm'n , 798 S.W.2d 531 (Tenn. App. 1990), which involved the issue of the UAPA's applicabili ty to the revi ew of licens ing proceedi ngs in w hich the plain tiff was denied a l icense to conduct horse racing. In Mid-South , this court stated that such proceedings "will be treated as 'contested cases' only if they contain three essential elements. The y must be a 'procee ding' con ducted by an 'age n cy' after th e opportunity for a 'hearing .' . . . Procee dings lacking any of these ingre dients are not contested cas es." Id. at 537. In the case before us , the appellant as serts that si nce the Commissi on did not
c onduct a proceeding after the opp ortunity for a hearing, there was no "contest e d
case " as is requi red b y the s tatu te f or jud icial review.

The problem with appellant's argument is th at the Mid-South case did not turn on the fact that there was no proceeding after

the opportunity

for a hearing but rather on the fact

that no such pr

oceeding was required. The court stat ed "the licensing proceeding involved in this cas e was no t a contested cas e because the commission was not required to afford Mid -Sou th a h eari ng b efo r e acting on i ts application." Id. at 537 (emphasis added). Significantl y, the UAPA defines "contested- 11 -

case" as "a pro ceedin g, including a declaratory proceeding, in which the legal rights, duties or privileges of a part y are required by any statute o r constitu tional provision to be determined by an agency

after an opportunit

y for a heari ng." Tenn. Code Ann. § 4-5-102( 3) (1991) (emphasis added) . In Mid-South , the court found that state l aw d id not contain a contested case hearing re quirement nor was there one arising from a constituti onally pr otected property

interest i n a racing license. Mid-South , 798 S.W.2d at 539-40. On the other hand, in the case at bar, we hav e concluded that due process requires that a regular employee with a property interest in his positi on receive the h earing an d proceedings upon the reclassif ication of his position to executive service. Since there is a contested cas e hearing requirement,
we affirm the chancery court in i ts determinati on that this was a proper matte r for review under the UAPA.

For the foregoing reasons, the dec ision of the chanc ery cour t is affirmed in all respects. As a regula r emp loyee wi th a property interest i n his positi on under Tennessee's Civil ServiceCode, Mr. A rmstrong had a right to procedural due process when his positi on was rec lassified to executive se rvice. We direct that he be allowe d to use the grievance procedures established by the legislature to raise his complaint regarding the reassignment of his position. Finally, we affirm the chancery court's

de cision to revie w Mr. Armstrong' s petition under the UAPA. The costs on appea l should be taxed to the state.

________________________________ BEN H. CAN TRELL, JUDGE

CONCUR:- 12 -

_______________________________ HENRY F . TODD, PRESID ING JUDGE MIDDLE SEC TION

_______________________________ DAVID H. WELLES, JUDGE