Case Name: Cynthia J. Phillips vs. Youth Development Program, Inc.
Court: Massachusetts Appeals Court
Jurisdiction: Massachusetts
Decision Date: 1982-11-08
Citations: 14 Mass. App. Ct. 626
Docket Number: 
Parties: Cynthia J. Phillips vs. Youth Development Program, Inc.
Judges: 
Reporter: Massachusetts Appeals Court Reports
Volume: 14
Pages: 626–649

Head Matter:
Cynthia J. Phillips vs. Youth Development Program, Inc.
Hampden.
June 10, 1981.
November 8, 1982.
Present: Armstrong, Greaney, & Smith, JJ.
Anne Rideout for the defendant.
Gerald R. Hegarty for the plaintiff.

Opinion:
Smith, J.
The plaintiff brings this action against her employer, Youth Development Program, Inc. (YDP), alleging that she was wrongfully discharged in that she was not afforded procedural due process as required under the Fourteenth Amendment to the United States Constitution and art. 12 of the Massachusetts Declaration of Rights. The Fourteenth Amendment to the Constitution provides in part that "[n]o State shall. . . deprive any person of life, liberty, or property, without due process of law." The heart of the plaintiff's claim is that YDP, a private corporation, is associated with the Springfield Division of the Juvenile Court Department of the Trial Court (Juvenile Court) in such a close and continuing fashion that its action in discharging her is fairly attributable to the State, and therefore she is owed due process. Evans v. Newton, 382 U.S. 296, 299 (1966) ("[C]onduct that is formally private may be so entwined with governmental policies or so impregnated with a governmental character as to become subject to the constitutional limitations placed upon [S]tate action"). See also Lugar v. Edmondson Oil Co., 457 U.S. 922, 939-942 (1982); Rendell-Baker v. Kohn, 457 U.S. 830, 839-843 (1982). The plaintiff seeks reinstatement to the position from which she was discharged, compensation for the time she was unemployed, reimbursement for health insurance payments, damages for intentional infliction of emotional distress, and attorney's fees. In reply, the defendant argues that YDP is an independent contractor and that its action in firing the plaintiff was merely private conduct which is not subject to due process requirements. Shelley v. Kraemer, 334 U.S. 1, 13 (1948) ("[T]he principle has become firmly embedded in our constitutional law that the action inhibited by the first section of the Fourteenth Amendment is only such action as may fairly be said to be that of the States. The Amendment erects no shield against merely private conduct, however discriminatory or wrongful"). See also Civil Rights Cases, 109 U.S. 3 (1883); Jackson v. Metropolitan Edison Co., 419 U.S. 345 (1974); Rendell-Baker v. Kohn, 457 U.S. at 839-843.
The case was tried before a judge, sitting without a jury, who ruled that the defendant's action in firing the plaintiff constituted State action, and judgment was entered in favor of the plaintiff. Later the judge filed supplemental findings to the effect that the plaintiff's communications were constitutionally protected and which also established the amount of attorney's fees. An amended judgment was entered and the defendant appeals from that judgment. We have before us a transcript of the evidence that accompanied the judge's findings of fact. We accept his findings unless clearly erroneous. Mass.R.Civ.P. 52(a), 365 Mass. 816 (1974). We note that the trial judge, at the time he made his findings, did not have the benefit of the trilogy of recent decisions of the United States Supreme Court that involve the problem of State action. As a result, it is necessary for us, at times, to make our own findings on certain points. Our findings, however, do not depend on the credibility of witnesses; they are based on documentary evidence, i.e., the articles of organization and the by-laws of YDP, and the written contract between YDP and the Commonwealth. We now summarize the relevant facts, including the history of YDP and its relationship with the Juvenile Court, as well as the events which culminated in the discharge of the plaintiff.
1. History and function of YDP. In 1971, the plaintiff was hired by the Juvenile Court as a social worker and was assigned to its intensive juvenile probation program. This program, not statutorily mandated, was financed by the Governor's Committee on Criminal Justice, and was concerned with broadening the alternatives available to juveniles on probation. In 1972, in order to increase its financial flexibility, the program was incorporated as YDP under G. L. c. 180. The purposes of the corporation as detailed in its articles of organization were: (1) " [t]o provide individual and group counseling, recreational and educational program^] for those children referred to it by the Springfield Juvenile Court and by duly organized and established organizations seeking its service[s]"; and (2) "[t]o help facilitate communication between various institutions dealing with youth, such as the police, courts, schools and other social agencies, and to broaden the awareness and understanding of the general community regarding the unique problems of youth, and to do all things incidental or convenient to carry out these purposes."
The various functions of the staff of YDP were substantially the same after incorporation as before. The sole institutional client was the Juvenile Court. Juveniles were referred to YDP by Juvenile Court probation officers, who recommended the types of services they desired the juveniles to receive from the staff. Staff members would screen the referrals and determine whether a juvenile could benefit from YDP services. In addition to intensive individual and group counseling, the services consisted of an alternative classroom for junior high school juveniles, a volunteer program matching people in the community with probationers, and a recreational activities program.
2. The corporate organization of YDP. Of the seven original incorporators of YDP, five were employees of the Juvenile Court. They included the judge, the clerk, and assistant clerk, as well as the chief probation officer and the assistant chief probation officer. Under the by-laws, the sole duty of the incorporators was to elect persons to the board of directors. At the time of the discharge of the plaintiff, there were nine directors, of which three were employees of the Juvenile Court, including the chief probation officer, her assistant, and the assistant clerk. The business of the corporation was managed by the board of directors. The by-laws provided that the "Intensive Probation Program will be subject, in all phases, to the final approval of the presiding justice of the Springfield Juvenile Court[,] which will include policy, programming, and personnel."
3. Financing of YDP. In January, 1977, the Hampden County commissioners entered into a contract with YDP whereby the latter provided intensive juvenile probation services to the Juvenile Court. The contract was terminated on June 30, 1979, because of the takeover of court costs by the Commonwealth. See G. L. c. 29A, § 1, inserted by St. 1978, c. 478, § 12. Until that date, YDP was funded solely by Hampden County, and during the covered period the employees of YDP received their paychecks and W-2 forms from the county.
In early 1979, the board of directors anticipated the takeover by the Commonwealth of court costs and started to negotiate a contract with the Commonwealth. They were successful, and financing for YDP's program was included as a line item in the Commonwealth's budget for the fiscal year beginning July 1, 1979, which was signed by the Governor on July 19 of that year. After July 1, 1979, YDP was exclusively funded by the Commonwealth for each fiscal year. All salaries were disbursed from and administered through the office of the State Treasurer. Tax withholding forms for the staff of YDP were received from the State, but bore the notation "non-employee. "
4. YDP's contract with the State. Although State financing was secured in July, 1979, YDP's contract with the Commonwealth was not executed until October 11, 1979. The contract is of considerable significance because the judge relied on certain clauses of the contract in holding that there was State control. The judge found that "[t]he contract is replete with instances of domination by and requirements of cooperation with the [c]ourt." In order to show "domination" of YDP by the State, the judge quoted clauses wherein YDP agreed to "cooperate administratively with all other programs and entities that provide services to the [j]udicial [b]ranch" and to "be available to meet with and work out schedules with the presiding justice [of the Juvenile Court]" and "cooperate with the [administrative [o]ffice and [j]ustices of the Trial Court." In addition, the judge noted that the contract required quarterly statistical and financial reports to the administrative office and that YDP had to establish a satisfactory accounting system.
The only finding of the judge concerning personnel matters was that under the contract YDP had to follow "[certain hiring practices." Because the judge did not have the benefit of Rendell-Baker v. Kohn, 457 U.S. 830 (1982), Lugar v. Edmondson Oil Co., 457 U.S. 922 (1982), and Blum v. Yaretsky, 457 U.S. 991 (1982), he did not make any further findings regarding the degree of control over YDP personnel that was granted to the Commonwealth by the contract. We note that the contract states that YDP must "publicly advertise any position which becomes available as a result of this [contract]." YDP was responsible for the "daily supervision of the program" and "for the competency of all personnel employed or assigned under" the contract "and [must] evaluate the background and experience of said personnel." YDP was required to "keep on file the names, addresses, and description of experience and background of members of its staff." Also YDP was required to "provide information of any change in personnel hired by or associated with [YDP]" in connection with the contract. Finally, in two places in the agreement, YDP agreed "to provide personnel and necessary supporting services in accordance with" the contract. We note that nothing in the contract gave to the Commonwealth the right to hire or fire personnel. The contract was executed on October 11, 1979, by the Chief Administrative Justice of the Trial Court and Samuel A. Marsella, president of YDP, for that organization. Mr. Marsella is an attorney engaged in private practice.
5. The discharge of the plaintiff. Following the incorporation of YDP in 1972, the plaintiff and all her immediate coworkers in the intensive juvenile probation program were transferred to the new corporation. At that time, the Juvenile Court judge gave the plaintiff and her coworkers the oath as deputy probation officers of the Juvenile Court. During her tenure as an employee of YDP until October, 1979, the plaintiff was never reprimanded or disciplined for misconduct.
During the spring of 1979, the board of directors entered into contract negotiations with the Commonwealth. Because of the sensitivity of the negotiations, the staff, including the plaintiff, was admonished not to engage in independent lobbying activities. The board of directors and the program director informed the staff on several occasions that they alone would participate in lobbying and negotiations.
Although financing for YDP's program was included as a line item in the Commonwealth's budget for the fiscal year beginning July 1, 1979, the budget was not signed until July 19, 1979, and the contract was not executed until October 11, 1979. Consequently, no compensation checks from the Commonwealth were forthcoming by the end of July, 1979. To fill the void, the treasurer of YDP personally borrowed and advanced money to the staff for July salaries with the understanding that the money would be repaid upon receipt of the July salary checks. On August 20, 1979, the staff was informed that a contract still had not been signed and that the Commonwealth might not issue the checks until sometime in October.
The prospect of delayed payments caused the plaintiff to anticipate personal financial problems. She sought out one Burnett, president of a local bank, to discuss the possibility of a loan to cover her expenses while her salary payments were interrupted. She explained to Burnett her financial problems and the cause of them. Burnett informed the plaintiff that he would have to investigate YDP's situation because he wanted to be assured that the plaintiff would be in a position to repay the loan if it was granted by the bank. He indicated that he knew State Senator Alan Sisitsky and that he would communicate with the Senator's office for the information. He also indicated his personal displeasure with a situation which forced someone like the plaintiff to borrow money while awaiting pay.
Burnett called Senator Sisitsky's office, but because he had few of the details which the Senator's aides needed in order to check on the funding question, he called the plaintiff and requested that she submit a memorandum to him outlining the situation in regard to the delay of YDP's contract. On August 24, 1979, the plaintiff responded with a memorandum that was factual, but which reflected her frustration and partisan concern. Burnett, in turn, sent the memorandum directly to the Senator, accompanied by a handwritten indignant note asking the Senator to look into the matter.
On September 18 or 19, 1979, as a result of a communication from the director of YDP, the plaintiff discovered for the first time that Burnett had written to Senator Sisitsky. On September 27, six of the nine directors met, and five voted to discharge the plaintiff. Two of those six directors were employees of the Juvenile Court, one of whom abstained from voting. On October 4, the plaintiff met with the director and Mr. Marsella and was informed by Mr. Marsella that she was being discharged because of insubordination.
The plaintiff returned that afternoon with her attorney, intending to meet with the board of directors. However, the five directors who met that afternoon did so as the personnel committee, not as the board of directors. At that meeting the plaintiff was informed that her involvement in "facilitating" Burnett's letter to Sisitsky was deemed to con stitute lobbying which was insubordinate behavior on her part and was in conflict with the board's stated policy.
Counsel for the plaintiff requested a hearing before the full board. Mr. Marsella indicated that he would not change his vote in favor of the plaintiff, but left the decision whether to attend a meeting of the full board to the plaintiff. The plaintiff opted not to pursue the matter further before the full board but brought this action instead.
Our inquiry is not directed in the first instance to whether the plaintiff was discharged because of speech or conduct protected by the Constitution, or without adequate due process, but rather to the question whether the challenged conduct of YDP, a private corporation, in discharging the plaintiff can fairly be seen as State action. If the conduct of YDP is not State action, our inquiry ends. Rendell-Baker v. Kohn, 457 U.S. at 838.
The trial judge found that the discharge of the plaintiff by YDP constituted State action because (1) YDP performed a public function; (2) YDP's entire budget was obtained from the Commonwealth; and (3) YDP was subject to extensive control by the Commonwealth as a result of its contract. As stated before, the judge did not have the benefit, as we do, of the trilogy of cases decided by the United States Supreme Court after judgment was entered in this case. Based on the analysis found in those cases, and particularly in Rendell-Baker v. Kohn, 457 U.S. 830 (1982), we find there was no State action in the discharge of the plaintiff.
The trial judge ruled that YDP performed a public function in that it provided services "directly related to and dependent upon the Springfield Juvenile Court and its administration of justice." The relevant question, however, is not whether a private group is serving a "public function" but "whether the function performed has been 'traditionally the exclusive prerogative of the State'" (emphasis in original). Rendell-Baker v. Kohn, 457 U.S. at 842 (quoting Jackson v. Metropolitan Edison Co., 419 U.S. at 353). The services provided by YDP, i.e., individual and group counselling, and the furnishing of recreational and educational programs to juvenile probationers, have not traditionally been the exclusive province of the Commonwealth. Churches, private schools, civic groups, Boys Clubs and Girls Clubs, the YMCA and YWCA, and other private groups have been providing similar services to troubled youths for well over a century. The establishment and the maintenance of a juvenile probation system is undoubtedly a traditional function of government. There is, however, no statute or State regulation that requires a court to establish an intensive probation program or to provide the type of services that are rendered by YDP. See Rendell-Baker v. Kohn, 457 U.S. at 842; Blum v. Yaretsky, 457 U.S. at 1011. The fact that YDP's clients are referred by the Juvenile Court does not make the discharge decision State action. See Rendell-Baker v. Kohn, 457 U.S. at 832-833, 842 (maladjusted children referred to private schools under G. L. c. 71B by city or town school committees or State agency). The oath taken by the plaintiff and other employees of YDP as deputy probation officers does not make the discharge of the plaintiff State action. The plaintiff was not paid as a probation officer, nor did she, under the relevant statute, perform duties similar to those of regular Juvenile Court probation officers.
The trial judge found that the entire budget of YDP was obtained from the Commonwealth, and this finding was an element in his determination that the decision to discharge the plaintiff was State action. In regard to this point, the Supreme Judicial Court has held that "near-complete governmental funding does not turn a private charitable and educational institution into a public entity so long as the private institution remains free, in fact, to control its own affairs." Bello v. South Shore Hospital, 384 Mass. 770, 776 (1981), quoting with approval Rendell-Baker v. Kohn, 641 F.2d 14, 25 (1st Cir. 1981). See also Rendell-Baker v. Kohn, 457 U.S. at 841-842. The fact that the Juvenile Court was the sole source of referrals and that YDP received 100% financing from the Commonwealth does not by itself make the discharge of the plaintiff State action. Ibid. ("The school... is not fundamentally different from many private corporations whose business depends primarily on contracts to build roads, bridges, dams, ships, or submarines for the government. Acts of such private contractors do not become acts of the government by reason of their significant or even total engagement in performing public contracts") .
The trial judge found that YDP was subject to extensive control by the Commonwealth as a result of its contract, and this finding was another element in his decision that State action was present in the decision to discharge the plaintiff. The United States Supreme Court, however, in Rendell-Baker v. Kohn, 457 U.S. at 841-842, and Blum v. Yaretsky, supra at 1010-1011, noted that the school in Rendell-Baker and the nursing home in Blum were the sub jects of extensive regulations by the State but found no State action. In this case, it was not found, nor indeed alleged, that the decision to discharge the plaintiff was itself based on the contract or some rule of conduct or policy promulgated by the Commonwealth. Rendell-Baker v. Kohn, 457 U.S. at 842-843. From reading the contract, it is readily apparent that the Commonwealth had little interest in YDP's personnel matters and left the decisions of hiring and firing personnel to YDP.
The decision to discharge the plaintiff was made by the board of directors. There was no finding by the trial judge, nor any evidence, that the Juvenile Court judge participated in any way in the decision to discharge the plaintiff. The requirement in the by-laws that "the Intensive Probation Program will be subject, in all phases, to the final approval of the presiding justice of the Springfield Juvenile Court[,] which will include . . . personnel" refers to the hiring of personnel and not to discharge decisions.
In sum, the plaintiff has failed to show that "there is a sufficiently close nexus between the State and the challenged action of the [private corporation] so that the action of the latter may be fairly treated as that of the State itself." Jackson v. Metropolitan Edison Co., 419 U.S. at 351. Bello v. South Shore Hosp., 384 Mass, at 776. The contract with the Commonwealth did not require YDP to discharge the plaintiff, and where YDP retained control over personnel matters the decision by the board of directors to discharge was not State action.
The plaintiff asserts that the relationship between YDP and the Commonwealth is mutually beneficial or "symbiotic" and, therefore, the Commonwealth must be "recognized as a joint participant in the challenged activity." Burton v. Wilmington Parking Authy., 365 U.S. 715, 725 (1961). Although YDP's funding and function show a relationship of close cooperation with the Commonwealth, the broad range of independent discretion which, under the contract, the board of directors appears to possess, especially in personnel matters, "beliefs] the notion of [S]tote domination." Rendell-Baker v. Kohn, 641 F.2d at 27.
In the memorandum of law filed by the plaintiff after the decision of the United States Supreme Court in Rendell-Baker v. Kohn, 457 U.S. 830 (1982), the plaintiff argued that if this court finds no State action, the case should be remanded to the trial judge because he made no findings as to count 3 of the plaintiff's complaint. That count alleged the plaintiff's discharge constituted a breach of the implied condition of good faith and fair dealing contained in the plaintiff's employment contract. We note, however, that the plaintiff did not allege in her complaint, nor did she introduce any evidence to the effect, that she was discharged in order to prevent her from obtaining compensation that was related to her past service. Thus, this case does not fall within the line of cases illustrated by Fortune v. National Cash Register Co., 373 Mass. 96, 104-105 (1977), Cort v. Bristol-Myers Co., 385 Mass. 300, 303 (1982), and Maddaloni v. Western Mass. Bus Lines, 386 Mass. 877, 881 (1982).
The judgment is reversed and a new judgment is to enter dismissing the action.
So ordered.
Plaintiff asserts in her brief that the action is brought under 42 U.S.C. § 1983 (1970), which prohibits interference with Federal rights "under color of" State law. A person may bring an action under § 1983 in a State court, Rzeznik v. Chief of Police of Southampton, 374 Mass. 475, 484 (1978) ("Because neither § 1983 nor its jurisdictional counterpart, 28 U.S.C. 1343 [1970], vests exclusive jurisdiction over civil rights cases in the Federal courts, a grant of concurrent jurisdiction in the State courts is presumed"). However, the plaintiff failed to allege all of the necessary elements of a § 1983 claim in her complaint; nor did she specifically refer to the statute in her pleadings, as is the "preferable course." See Rzeznik v. Chief of Police of Southampton, 374 Mass. at 484 n.8. Nevertheless, to find the requisite "State action" at issue in this case, our analysis is identical under either the Fourteenth Amendment or § 1983. See United States v. Price, 383 U.S. 787, 794 n.7 (1966); Lugar v. Edmondson Oil Co., 457 U.S. 922, 930-932 (1982).
General Laws c. 12, § 111, inserted by St. 1979, c. 801, § 1, approved November 16, 1979, which provides a private right of action for a violation of constitutional rights, was not in effect at the time plaintiff was fired.
The judge found for the defendant on the count for intentional infliction of emotional distress. "Compensatory" damages were granted, however, for an alleged violation of the plaintiff's First Amendment rights.
On February 12, 1981, after the briefs had been filed in this case, the United States Court of Appeals for the First Circuit decided the case of Rendell-Baker v. Kohn, 641 F.2d 14 (1st Cir. 1981). Both parties recognized that Rendell-Baker was a key case with respect to State action and accordingly devoted a considerable portion of their oral arguments to discussing its effect on the decision in this case. While this opinion was being prepared, the United States Supreme Court granted certiorari in Rendell-Baker. It was the belief of the members of the panel that this decision should be postponed until the Supreme Court decided Rendell-Baker because that decision would clearly have significant bearing on the critical issue of State action in this case. Counsel for both parties were notified that the decision in this case would be late. The Supreme Court affirmed the First Circuit Court of Appeals on June 25, 1982. Rendell-Baker v. Kohn, 457 U.S. at 830. After the decision was announced, we requested counsel to file memoranda of law addressing the impact of Rendell-Baker on the issues in the present appeal. Counsel responded and their memoranda have been of assistance to this court.
On June 25, 1982, the Supreme Court decided three cases involving the question whether or not private actions were State actions for the purposes of the due process clause of the Fourteenth Amendment. The cases are Rendell-Baker v. Kohn, 457 U.S. 830; Lugar v. Edmondson Oil Co., 457 U.S. 922; and Blum v. Yaretsky, 457 U.S. 991.
This organization disbursed Federal funds received by the Commonwealth from the Law Enforcement Assistance Administration. See Rendell-Baker v. Kohn, 641 F.2d 14, 17 n.4 (1st Cir. 1981).
The articles of organization stated that the corporation could provide its services not only to the Springfield Juvenile Court but also to other "duly organized and established organizations" seeking its services. Apparently, no other organization had applied for its services.
The discharge of the plaintiff took effect prior to the execution of the contract on October 11, 1979. The contract was retroactive to July 1, 1979, which date was prior to.the plaintiff's discharge.
This clause is undoubtedly the basis for the judge's finding that YDP had to follow "certain hiring practices."
In this instance, deputy probation officers do not have the same status as probation officers. Under G. L. c. 276, § 89A (inserted by St. 1967, c. 401), judges of the District and Superior Courts may appoint volunteer workers to serve as deputy probation officers to probationers under the age of 17 who have been placed in the care of probation officers. The statute states that the deputy probation officers are to serve as counsellors in order that the probationers "may receive to a greater degree individual attention and guidance." Unlike probation officers, deputy probation officers do not receive compensation, and there are no qualifications necessary for the position.
In Rendell-Baker v. Kohn, supra, a privately operated school for maladjusted high school students fired some of its teachers for criticizing school policies and the director of the school. The United States Supreme Court held that State action was not involved in the discharge of the teachers. The facts showed that in recent years nearly all of the students had been referred to the school by city school committees under G. L. c. 71B, § 3 & 4, or by a State agency. At least ninety percent of the school budget was paid out of public funds. In order to be eligible for tuition funding under the statute, the school had to comply with a variety of State regulations. The Court stated that the fact that the school performed a public function in educating maladjusted students did not make its act State action. The school's receipt of public funds did not make the discharge decisions acts of the State, nor was the decision to discharge compelled, or even influenced, by any State regulation. The Court noted that the regulations imposed on the school contain very few personnel requirements. Finally, the Court held that there was no "symbiotic relationship" between the school and the State.
Under G. L. c. 119, § 57, a probation officer must investigate every case of a delinquent child and make a report. The probation officer must be in court at the trial of the case "and furnish the court with such information and assistance as shall be required." There was no evidence that any of the staff of YDP who had been sworn in as deputy probation officers ever performed such functions.
In Rendell-Baker v. Kohn, 457 U.S. at 841-842, the United States Supreme Court noted that the State agency had the power to approve persons hired as vocational counselors, but the Court held that such a regulation was not sufficient to transform a decision to discharge an employee, if made by private management, into State action.
Our holding that the by-laws do not require the judge to approve discharge decisions of the board as to personnel is buttressed by the fact that the plaintiff does not allege or argue that the action of the board of directors in discharging the plaintiff was defective because the decision did not receive the approval of the judge. Also see note 12, supra, as to the effect on discharge decisions of the State's power to approve the hiring of personnel.