Opinion
14-P-1060
08-26-2015
ISO NEW ENGLAND INC. v. MASSACHUSETTS COMMISSION AGAINST DISCRIMINATION & another.
NOTICE: Summary decisions issued by the Appeals Court pursuant to its rule 1:28, as amended by 73 Mass. App. Ct. 1001 (2009), are primarily directed to the parties and, therefore, may not fully address the facts of the case or the panel's decisional rationale. Moreover, such decisions are not circulated to the entire court and, therefore, represent only the views of the panel that decided the case. A summary decision pursuant to rule 1:28 issued after February 25, 2008, may be cited for its persuasive value but, because of the limitations noted above, not as binding precedent. See Chace v. Curran, 71 Mass. App. Ct. 258, 260 n.4 (2008).
MEMORANDUM AND ORDER PURSUANT TO RULE 1:28
The appeal and cross appeal originate with a complaint filed with the Massachusetts Commission Against Discrimination (Commission) on June 15, 2004, by the intervener, Steven St. Marie. St. Marie alleged that ISO New England Inc. (ISO) terminated his employment in retaliation for his having engaged in activities protected by G. L. c. 151B. The Commission found probable cause and then held a public hearing. At the hearing, ISO's chief operating officer, Stephen Whitley, testified that he made the decision to terminate St. Marie after a December 1, 2003, power outage on Cape Cod and southeastern Massachusetts. Specifically, Whitley explained that his decision was based on St. Marie's failure to exercise leadership in the control room during the outage, his departure from the control room right before the outage to attend to routine matters, his insistence on blaming other factors and not taking responsibility for the outage, and his subpar performance on two prior occasions between 2000 and 2001 (one when he left the control room during an approaching snow storm and the other when he displayed an effigy of his supervisor in a noose). The hearing officer issued two decisions: (1) she concluded that ISO violated G. L. c. 151B's prohibition against retaliation in employment by discharging St. Marie on account of his filing complaints of age discrimination in 1996 and retaliation in 1997, and (2) she ordered ISO to pay monetary and emotional distress damages.
ISO is a corporation that manages the bulk electrical power system in New England.
It is unlawful for an employer to discriminate against any employee because the employee has opposed a practice forbidden under G. L. c. 151B. See G. L. c. 151B, § 4(4). In 1996, St. Marie was one of seven employees who filed a complaint with the Commission against ISO's predecessor, Northeast Utilities, for age discrimination. In 1997, ISO took over for Northeast Utilities and St. Marie filed a second complaint with the Commission against ISO and its human resources manager alleging age discrimination and retaliation. In 2000, the seven employees participated in mediation and reached a settlement. St. Marie later attempted to rescind his agreement to settle. A Superior Court judge enforced the agreement and dismissed the action, leaving St. Marie's appeal from the dismissal as the only remaining action.
St. Marie had been the shift supervisor during the outage, which lasted two hours and affected approximately 300,000 homes.
ISO appealed the hearing officer's decisions, and the Commission subsequently affirmed those decisions, except for the award of postjudgment interest as to the projected pension losses. The Commission determined that, while the hearing officer erroneously relied on Schuster v. Baskin, 354 Mass. 137 (1968), misapplying it in her prehearing decision prohibiting ISO from presenting evidence of presettlement incidents, including the two prior occasions of St. Marie's subpar performance, ISO was not prejudiced thereby.
ISO filed the complaint in the instant case in Superior Court, pursuant to G. L. c. 151B, § 6, and G. L. c. 30A, § 14(7). ISO moved for judgment on the pleadings pursuant to Mass.R.Civ.P. 12(c), 365 Mass. 756 (1974), asserting that the Commission's decision on liability and damages was unsupported by substantial evidence and based on material errors of law. The judge denied ISO's motion in part as to liability and certain damages, and allowed it in part, reducing the amount of lost pension accruals based on St. Marie's failure to mitigate damages. The judge also concluded that the hearing officer's refusal to consider the two presettlement incidents as legitimate reasons for termination was error, but that it was harmless error. A judgment entered affirming the Commission's decision except for the award of lost pension accruals, which was reduced. ISO appeals from the judgment; St. Marie cross-appeals from so much of the judgment that reduces the Commission's damages award.
Discussion. "[U]nder the State Administrative Procedure Act the court must defer to the fact-finding function of the commission where there is substantial evidence to support its findings and there is no other error of law. See G. L. c. 30A, § 14 (7)." Wheelock College v. Massachusetts Commn. Against Discrimination, 371 Mass. 130, 133 (1976). "We will affirm a decision and order of the [Commission] unless the findings and conclusions are unsupported by substantial evidence or based on an error of law" (footnote omitted). Salem v. Massachusetts Commn. Against Discrimination, 44 Mass. App. Ct. 627, 640-641 (1998). Where, however, "an agency's decision is based on a question of law, we review the commission's interpretation de novo." Hogan v. Labor Relations Commn., 430 Mass. 611, 613 (2000). See Protective Life Ins. Co. v. Sullivan, 425 Mass. 615, 618 (1997) (principle of granting substantial deference to administrative agency "is one of deference, not abdication"). Here, the hearing officer's failure to consider the two presettlement incidents as reasons for termination was error, and this error permeated the entire process and substantially prejudiced ISO.
The error of law made by the hearing officer and the Commission required that the Superior Court judge review the case de novo. See Hogan, supra. Instead, the judge gave great deference to the Commission and concluded that the hearing officer's error of excluding the presettlement incidents was harmless. It is clear to this court that the hearing officer did not consider the presettlement incidents as reasons for termination, as she wrote in her decision that those incidents "must be discounted." This was not a harmless error. One significant basis for the hearing officer's finding of discriminatory retaliation was the disparate discipline meted out to the other employees involved with the power outage. ISO argues that the presettlement incidents affected St. Marie's discipline, and therefore go to the heart of the controversy. We agree, and conclude that the hearing officer's exclusion and refusal to consider the presettlement incidents as reasons for the disparate discipline was error and not only affected the hearing officer's decision-making process, but also the subsequent decision by the Commission and the Superior Court judge.
The judge reasoned that the error was harmless because, in addition to excluding the incidents, the hearing officer discredited the testimony of Whitley and ISO's chief financial officer, Robert Ludlow, that Whitley did not know about the settlement prior to terminating St. Marie and that Ludlow did not inform Whitley of the settlement. The hearing officer found that this undermined ISO's position that St. Marie was fired only for job-related deficiencies rather than retaliation. The judge determined that because the hearing officer discredited Whitley's and Ludlow's testimony, she would not have accorded persuasive weight to St. Marie's presettlement performance issues.
In her decision, the hearing officer explained:
"[T]he September 12, 2003 settlement agreement between the parties states as its purpose: 'to fully and finally settle and terminate any and all differences, disputes, claims, and disagreements between them regarding [Complainant's] employment and the alleged discrimination and retaliation against him.' Since the prior events can reasonably be characterized as differences or disputes between the parties regarding Complainant's employment, the settlement agreement should be deemed to wipe them clean. See Schuster v. Baskin, 354 Mass. 137, 140 (1968) (General releases are fully enforceable and broadly construed). . . . Whitley was ultimately permitted to testify that the prior events influenced his state of mind when making the termination decision, but the settlement agreement makes clear that they should not have played a role in deciding what action, if any, to take against Complainant for the events of December 1, 2003."
While Trustees of Health & Hosps. of Boston, Inc. v. Massachusetts Commn. Against Discrimination, 449 Mass. 675, 682-683 (2007), makes it clear that a plaintiff is not required to prove disparate treatment among similarly-situated employees, the hearing officer did partially base her decision on that analysis and the Commission and Superior Court judge relied on it. The Commission noted, "St. Marie was the only individual terminated, while other received little to no discipline. In this case, St. Marie was treated much more harshly than other employees involved in the power outage incident." This analysis traces back to the hearing officer's initial error and subsequent conclusion that St. Marie was similarly situated to the other involved employees. The presettlement incidents should have been considered when the hearing officer was determining whether the employees were similarly situated "in terms of performance, qualifications and conduct," Matthews v. Ocean Spray Cranberries, Inc., 426 Mass. 122, 130 (1997), or whether the other employees' circumstances were "substantially similar to those of the complainant 'in all relevant aspects' concerning the adverse employment decision." Trustees of Health & Hosps. of Boston, supra at 682. The hearing officer's refusal to consider the presettlement incidents impacted her comparison of the employees. ISO argues that those incidents should have been considered, that the employees involved were not similarly situated, and, therefore, that the disparate treatment should not allow an inference of retaliation. The judge noted that the similar roles played in the events leading up to the power outage and the lower levels of discipline received by other employees were central to the hearing officer's decision. The judge did his own similarly-situated analysis, based on the findings of the Commission and the hearing officer. Those initial erroneous findings tainted the entire process.
The Commission noted that "despite [the hearing officer's] ruling in a pre-trial order that precluded ISO from relying upon pre-settlement conduct to support its termination decision, the Hearing Officer heard and considered Whitley's testimony about the relevance of these events." The Commission concluded that, therefore, the pretrial order could not have prejudiced ISO. Given the hearing officer's explicit statement that the settlement wiped away the presettlement incidents and that those incidents should not have played a role in ISO's decision on its action against St. Marie, see note 5, supra, it is clear to us that she did not consider the presettlement incidents as a basis for termination and that her failure to do so permeated the Commission's decision as well.
Accordingly, we vacate the judgment and remand the matter to the Commission for de novo review, and reconsideration of damages in the event that liability is found, consistent with this memorandum and order.
As noted, St. Marie cross-appealed from so much of the judgment that reduced the Commission's damages award. In the event that the Commission on remand finds liability -- and we do not in any way express a view on that question -- damages would then remain an issue for determination. We note that the Superior Court judge presented a careful analysis regarding St. Marie's obligation to mitigate damages and the appropriateness of modifying the damages awarded by the Commission. It has also not been made to appear that the judge erred in declining St. Marie's invitation to offset the reduced damages award.
So ordered.
By the Court (Cypher, Trainor & Katzmann, JJ.),
The panelists are listed in order of seniority. --------
Clerk Entered: August 26, 2015.