This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (2002).
STATE OF MINNESOTA
IN COURT OF APPEALS
City of Pequot Lakes,
Filed August 17, 2004
City of Pequot Lakes City Council
Don L. Bye, Don L. Bye, P.A., 1000 Torrey Building, 314 West Superior Street, Duluth, Minnesota 55802 (for relator)
Patricia Y. Beety, League of Minnesota Cities, 145 University Avenue West, St. Paul, Minnesota 55103-2044; and
Thomas A. Fitzpatrick, 220 Laurel Street, Brainerd, Minnesota 56401 (for respondent)
Considered and decided by Hudson, Presiding Judge; Lansing, Judge; and Willis, Judge.
U N P U B L I S H E D O P I N I O N
In this certiorari appeal, relator Martha Peisch argues that she held a property interest in her continued employment with the City of Pequot Lakes, and, therefore, she was entitled to due process before termination of her employment. Peisch contends that the city violated her right to due process by denying her a meaningful hearing before terminating her employment. Peisch also argues that the city violated her due-process liberty interests by causing stigmatizing information about her termination proceedings to be printed in the local newspaper without providing her a proper name-clearing hearing. Because we conclude that Peisch did not have a property interest in her continued employment with the city, and the information printed in the local newspaper was not stigmatizing, we affirm.
The City of Pequot Lakes employed relator Martha Peisch as its city clerk/treasurer for approximately a decade. This position is subject to the city’s personnel policies in Chapter 10 of the Pequot Lakes City Code Ordinance No. 169.
In January 2003, a new mayor, Cathy Malecha, took office and reorganized the city administration. Mayor Malecha stated that immediately after she took office many people brought to her attention problems with relator’s job performance. In January or February 2003, Mayor Malecha and city council member Joanne Johnson met with relator to discuss several matters regarding issues they had with relator’s job performance.
On or about May 30, 2003, Mayor Malecha and council members Dave Sjoblad and Johnson met with relator for a second time. At this meeting, the mayor and council members addressed an alleged budget discrepancy, claiming that relator had improperly added $82,000 to the police department budget. In addition, they discussed relator’s use of profanity.
On or about June 12, 2003, relator met with the mayor and council members Justin Bolz-Andolshek and Sjoblad to discuss the problems previously brought to relator’s attention. At the end of this meeting, relator was put on a two-week suspension.
On the evening of July 6, 2003, relator was provided with a written list of the accusations against her. The list included the $82,000 budget discrepancy, various personnel issues, including complaints that relator yelled at co-workers in meetings and was rude to citizens, and other accounting irregularities.
On July 7, 2003, the city council held a special meeting to address the allegations against relator. At the meeting, relator requested that the city council hold a formal Loudermill hearing. The mayor and council members then discussed the allegations against relator, including the $82,000 budget discrepancy. Relator acknowledged that errors had occurred, but she claimed that without more specificity regarding the allegations, especially the budget discrepancies, she could not properly respond. A motion was made to terminate relator’s employment. The council proceeded with the vote and determined that it did not need to provide relator with specifics concerning the allegations against her because she had been provided sufficient notice of the allegations and further discussion would not change the issues. Minutes of the July 7, 2003, meeting reflect that the motion was based on a “. . . fundamental and irreparable lack of confidence in the city clerk/treasurer.” The motion passed.
A final city council meeting was held on November 25, 2003, and the city considered this hearing a post-termination hearing. At the November meeting, relator submitted a ten-page response, and her attorney made a legal presentation to the council. The meeting was limited to one hour. On December 1, 2003, relator was informed by letter that the city council had upheld her termination. This certiorari appeal follows.
D E C I S I O N
A petition for certiorari is the only method by which an employee may secure judicial review of a city’s employment termination. Dietz v. Dodge County, 487 N.W.2d 237, 239 (Minn. 1992). Our review is limited to an inspection of the record in which the court is necessarily confined to questions of jurisdiction of the board, the regularity of its proceedings, and whether the determination in a particular case was arbitrary, oppressive, unreasonable, fraudulent, under an erroneous theory of law, or without any evidence to support it. Id. (quoting State ex rel. Ging v. Board of Educ. of Duluth, 213 Minn. 550, 571, 7 N.W.2d 544, 556 (1942)).
Relator argues that because the Pequot Lakes City Code Ordinance No. 169 provides for a progressive disciplinary procedure, the city-code ordinance, in effect, provided relator a constitutionally protected property interest in her continued employment with the city. Accordingly, relator contends that she was entitled to various due-process rights before termination, which she contends she did not receive.
The city counters that because Ordinance 169 clearly and explicitly states that the policies in the city code should not be construed as contractual terms and are intended to serve only as “guides for employment,” the city ordinance did not give relator a property interest in her job and she was an at-will employee.
A public employee with a constitutionally protected property interest in employment must be afforded due process prior to termination. Cleveland Bd. of Educ. v. Loudermill, 470 U.S. 532, 542, 105 S. Ct. 1487, 1493 (1985). Absent a contract or property interest in continued employment employees in Minnesota may be dismissed at will. Cederstrand v. Lutheran Bhd., 263 Minn. 520, 532, 117 N.W.2d 213, 221 (1962); Rutherford v. County of Kandiyohi, 449 N.W.2d 457, 460 n.1 (Minn. App. 1989) (citing Skeets v. Johnson, 816 F.2d 1213, 1215 (8th Cir. 1987)), review denied (Minn. Feb. 28, 1990).
A protected property interest in public employment must be created by an independent source, such as a contract or a statute. Board of Regents of State Colleges v. Roth, 408 U.S. 564, 577, 92 S. Ct. 2701, 2709 (1972). A property interest has been found where by statute, rule, or contract the employee can be fired only “for cause.” Loudermill, 470 U.S. at 538-39, 105 S. Ct. at 1491 (holding that employee had property interest in continued employment because under statute he could only be dismissed for cause); Perry v. Sindermann, 408 U.S. 593, 601, 92 S. Ct. 2694, 2699 (1972) (noting that a written contract grants an employee property interest in job where the contract guarantees continued employment absent cause for termination).
But a property interest must be based on an entitlement of continued employment and not the mere expectation of notice prior to termination. Brekke v. City of Blackduck, 984 F. Supp. 1209, 1234 n.25 (D. Minn. 1997). While Minnesota has not directly addressed whether a grievance procedure or progressive-discipline policy creates a property interest, the federal courts have almost uniformly held “[g]rievance procedures that do not establish any grounds upon which termination must be based do not in themselves create a property interest in employment.” Hogue v. Clinton, 791 F.2d 1318, 1324 (8th Cir. 1986); see also id. at n.10 (“That an employee can expect review upon termination does not in itself create a legitimate expectancy of continued employment.”); see, e.g., Weinstein v. Univ. of Illinois, 811 F.2d 1091, 1097 (7th Cir. 1987) (proffer of procedure does not establish property interest in absence of substantive rules of entitlement, even if opportunity for hearing afforded others in past); Dorr v. County of Butte, 795 F.2d 875, 877 (9th Cir. 1986); Zeigler v. Jackson, 716 F.2d 847, 849 (11th Cir. 1983); Cato v. Collins, 539 F.2d 656, 660-61 (8th Cir. 1976).
Here, the City of Pequot Lakes Personnel Ordinance No. 169 provides for a disciplinary process before termination but does not state that an employee can only be terminated for good cause. City of Pequot Lakes, Minn., Ch. 10 Personnel Ordinance No. 169 (1944). Further, the city ordinance actually states that the policies in the ordinances are not to be construed as contractual terms and are intended to serve only as guides for employment. Id. at § 10.02. And in fact, Section 10.19, subdivision 5, allows the city council to immediately suspend employment for “severe infractions,” and Section 10.19, subdivision 3 I (2), allows the city council to dismiss “any employee” after a four-to-five vote or, with an abstention, three-to-four vote of the city council.
Thus, we conclude that the City of Pequot Lakes personnel ordinance’s progressive-discipline policy did not create an entitlement in relator’s job, but rather, merely an expectation of a warning before termination. Therefore, relator was an at-will employee, and as such, was not entitled to a hearing. Nevertheless, city officials met with relator in private and held two hearings at which relator was afforded an opportunity to refute the charges that resulted in her termination. Clearly, relator was afforded more process than was due.
Relator next contends that the city violated her due-process right to liberty by causing the reasons for her termination to be published in the local newspaper. Relator contends that the reasons stated for terminating her employment were stigmatizing because they went to her integrity and honesty in doing her job as an accountant for the city. Further, relator contends that because the city caused this stigmatizing information to be printed, the city was required to provide her with a name-clearing hearing, which it failed to do.
“A public employee has the right to a name-clearing hearing at a meaningful time if his termination is accompanied by publication of stigmatizing reasons for his termination that might impair future employment opportunities.” Schleck v. Ramsey County, 939 F.2d 638, 642 (8th Cir. 1991); see also Board of Regents of State Colleges v. Roth, 408 U.S. 564, 573, 92 S. Ct. 2701, 2707 (1972). A separate name-clearing hearing is not required to meet due-process requirements where a pre-termination hearing is granted followed by a full evidentiary hearing after the stigmatizing information was published. Schleck, 939 F.2d at 643.
The requisite stigma has generally been reserved for cases in which the employer has accused the employee of “dishonesty, immorality, criminality, racism, or the like.” Shands v. City of Kennett, 993 F.2d 1337, 1347 (8th Cir. 1993); Green v. St. Louis Housing Auth., 911 F.2d 65, 69 (8th Cir. 1990); Robinson v. City of Montgomery, 809 F.2d 1355, 1356 (8th Cir. 1987). The Minnesota Supreme Court has indicated that discharge on the grounds of poor performance, poor judgment, incompetence, unsatisfactory performance, or even insubordination, is not stigmatizing. Johnson v. Indep. Sch. Dist. No. 281, 494 N.W.2d 270, 275 (Minn. 1992). Under this standard, “general allegations of misconduct and insubordination [do] not rise to the requisite level of constitutional stigma[,]” nor may the stigma “be created by innuendo from inferences drawn from general allegations of misconduct and insubordination.” Mascho v. Gee, 24 F.3d 1037, 1039 (8th Cir. 1994) (citing Shands v. City of Kennett, 993 F.2d 1337, 1347 (8th Cir. 1993)).
Here, we are persuaded that the information published about the termination proceedings generally referred to poor performance, poor judgment, personnel conflicts, and insubordination, and therefore, under Johnson, was not stigmatizing.
But even if the information published in the articles stigmatized relator, relator and individuals who supported relator had an opportunity to defend her reputation at the July 7, 2003, meeting. Moreover, relator’s attorney defended her at both the July 7, 2003, and the November 25, 2003, hearings. Indeed, one of the articles contained quotes from relator’s attorney challenging all of the allegations against relator, as well as quotes from citizens who spoke in support of relator at the July 7, 2003, hearing. Therefore, we are persuaded that these hearings satisfied the requirement of a name-clearing hearing.
 In Cleveland Bd. of Educ. v. Loudermill, 470 U.S. 532, 546, 105 S. Ct. 1487, 1495 (1985), the United States Supreme Court held that public employees with a property interest in continued employment are entitled to due process prior to termination, including a pre-termination hearing at which the employee may present “ . . . his side of the story.”