Iowa Civil Rights Commission v. DUBUQUE AERIE #568 OF THE FRATERNAL ORDER OF THE EAGLES, a/k/a DUBUQUE FRATERNAL ORDER OF EAGLES NO. 568, a/k/a DUBUQUE ASSOCIATION NO. 568 OF THE FRATERNAL ORDER OF EAGLES,

02/19/2018
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IN THE IOWA DISTRICT COURT IN AND FOR DUBUQUE COUNTY

STEVE KUHLE AS FRATERNAL ORDER

OF EAGLES #568,

Petitioner,

v.

IOWA CIVIL RIGHTS COMMISSION,

Respondent,

And

PATRICIA KELLY AND MICHAEL

FISHNICK,

Intervenors.

Case No. 01311 CVCV106156

RULING

I. INTRODUCTION

Petitioner filed for Judicial Review on May 9, 2017. The matter came before the Court

for hearing on the Intervenors’ Motion to Dismiss on July 28, 2017. The Motion to Dismiss was

denied. Petitioner filed his Brief on October 10, 2017. The Respondent and Intervenors both filed

their respective Briefs on November 9, 2017.

II. PROCEDURAL HISTORY

Intervenors filed complaints with the Iowa Civil Rights Commission alleging their former

employer, Dubuque Association No. 568 of the Fraternal Order of Eagles, discriminated against

them on the basis of age. (Cert. Rec. at pg. 695-711). Following the investigation, the

Commission initiated a contested case proceeding against Petitioner, which took place on March

10-11, 2015, before the Administrative Law Judge (ALJ). The ALJ found in favor of the

Commission and issued a Proposed Decision on September 2, 2015. (Cert. Rec. at pg. 234-256).

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Petitioner appealed the Proposed Decision on October 6, 2015. (Cert. Rec. at pg. 163-

168). The Commission and Intervenors moved to dismiss the appeal as untimely on October 22,

2015, and October 26, 2015, respectively. (Cert. Rec. at pg. 169-172, 173-174). The Iowa Civil

Rights Commission denied the motions to dismiss on March 4, 2016. (Cert. Rec. at pg. 179-186).

The Iowa Civil Rights Commission held a hearing on Petitioner’s appeal on May 13, 2016. (Cert.

Rec. at pg. 187). The Commission issued an order for remand on June 3, 2016. (Cert. Rec. at pg.

21-22).

The ALJ held a hearing regarding remand on September 13, 2016, and issued a

Supplemental Proposed Decision in the Commission’s favor on November 21, 2016. (Cert. Rec.

at pg. 412-425). Petitioner appealed the Supplemental Proposed Decision on December 19, 2016.

(Cert. Rec. at pg. 39-44). The Commission filed its Final Order on April 10, 2017. (Cert. Rec. at

pg. 1-2) (the decision is dated April 6, 2017, but was served April 10, 2017). The Commission’s

Final Order determined that Petitioner unlawfully discriminated against Intervenors due to their

ages and awarded damages. Petitioner filed this action for judicial review from the

Commission’s final order.

III. STANDARD OF REVIEW

Judicial Review of a contested proceeding is to correct errors of law. Iowa Code §

17A.19. The Court’s review of an agency finding is at law and not de novo. Harlan v. Iowa

Department of Job Service, 350 N.W.2d 192, 193 (Iowa 1984). The Court will uphold the

agency’s action if it is supported by “substantial evidence in the record made before the agency

when that record is viewed as a whole” Iowa Code § 17A.19(8)(f).

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“Substantial evidence” means the quantity and quality of evidence that would be deemed

sufficient by a neutral, detached, and reasonable person, to establish the fact at issue when the

consequences resulting from the establishment of that fact are understood to be serious and of

great importance.” Iowa Code § 17A.19(10)(f)(1).

Evidence is substantial when a reasonable person could accept it as

adequate to reach the same findings. Conversely, evidence is not

insubstantial merely because it would have supported contrary

inferences. Nor is evidence insubstantial because of the possibility

of drawing two inconsistent conclusions from it. The ultimate

question is not whether the evidence supports a different finding

but whether the evidence supports the findings actually made. Reed

v. Iowa Dep’t of Transp., 478 N.W.2d 844, 846 (Iowa 1991).

An agency’s findings of fact are binding on appeal unless a contrary result is deemed as a

matter of law. UNI-United Facility v. Iowa Pub. Employment Relations Bd., 545 N.W.2d 274,

278 (Iowa 1996). The Court shall give appropriate deference to the view of the agency with

respect to particular matters that have been vested by a provision of law within the discretion of

the agency. Iowa Code Section 17A.11(c). An agency’s application of law to the facts can only

be reversed if determined that such an application was “irrational, illogical, or wholly

unjustifiable.” Iowa Code Section 17A.19(10)(m).

The party challenging the agency’s action bears the burden of proof. Winnebago Indus. v.

Haverly, 727 N.W.2d 567, 571 (Iowa 2006). The burden of proof is by a preponderance of the

evidence. Sahu v. Iowa Bd. of Medical Examiners, 537 N.W.2d 674 (Iowa 1995).

IV. STATEMENT OF THE FACTS

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The facts of this case are restated numerous times in the parties’ briefs and multiple

decisions on appeal. The basic facts are uncontested.1

Petitioner is a membership organization run by a board of trustees. As one of its

functions, Petitioner operates a bar or “social room.” Petitioner employs bartenders, a bar

manager, and at least one cook to work within the bar. Until fired, then 66-year-old Michael

Fishnick and then 78-year-old Patricia Kelly worked in Petitioner’s bar.

Fishnick began working for Petitioner in 2002 as a bartender, and was later promoted to

bar manager. Kelly began working for Petitioner in 1997 and worked as a bartender during her

entire period of employment. Both Fishnick and Kelly regularly worked the same scheduled

hours week to week. Steven Kuhle is a trustee for Petitioner and he supervised the bartenders.

Witness Melody Barry, an Eagles ladies’ auxiliary member, testified that in 2013 she

heard Kuhle talking to another trustee about needing younger bartenders and “eye candy.”

Another trustee, Paul Radabaugh, testified that he had heard a trustee make comments about

bringing in “eye candy” to work at the bar. Witness Susan Kline, an officer of the Eagles ladies’

auxiliary, testified she heard Kuhle make comments about Kelly slowing down, as well as

comments about wanting younger bartenders in the bar as “eye candy.”

On February 9, 2013, Fishnick arrived to work a special anniversary event at the bar.

Kuhle told Fishnick that the couple had specifically requested a female bartender for the event,

and that Fishnick could work in the back room. Fishnick had never heard of anyone specifically

requesting a female bartender at any time during his employment, but showed up to the event as

scheduled. When he arrived, Kuhle’s girlfriend, Jane Noble, was at the front bar. When Fishnick

1 The recitation of the facts was pulled from the Respondent and Intervenors’ Briefs, which cite the Administrative

Law Judge’s Proposed Decision, contained within the Certified Record, pages 234-256.

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went to the back bar, he discovered another employee already working that bar. That employee, a

male, told Fishnick he had been hired to work the back bar. At that time, the bar only had 6-8

patrons. Because there was no place for him to work, and he did not think it made sense to get

paid to stand around, Fishnick went home. The following Monday, Fishnick returned to work as

usual. He met with the trustees to explain why he had left the event, explaining that both bars had

staff. Fishnick then worked the rest of the week without incident. The next week, Fishnick was

told the trustees had voted to terminate his employment.

During the same meeting in which the trustees voted to terminate Fishnick’s

employment, they also voted to change Kelly’s long-standing regular schedule. Kelly’s schedule

was reduced from daytime hours to three nights per week, which would require her to work as

late as 2:00 a.m. Not only would Kelly not be able to pay her bills with the reduced schedule, but

it was common knowledge that she preferred to not be out alone at night or climb the steps to her

house in the dark. When Kuhle told Kelly the new schedule, she asked him if he was too chicken

to fire her and was attempting to force her to quit. Kuhle simply shrugged his shoulders in

response. Kelly did not return to work, and had her daughter call and ask for her old hours back.

The bartender who answered the phone claimed that Kelly had retired.

During this same period, Kuhle hired Jamie Fransen, a 27-year-old female. Although

Kuhle claims the entire board of trustees voted on the hire, the vote is not reflected in any

meeting minutes, and Trustee Radabaugh denied any involvement in hiring Fransen. Fransen

introduced herself to both Fishnick and Kelly as the new full-time bartender. Both found this

odd, as no employee had enough hours to be considered full-time. Fransen worked an average of

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17.5 hours per week initially, and she then worked approximately 40 hours per week after

Fishnick and Kelly were gone.

Fishnick, Kelly, and witness Robert Baker (bar patron), testified that Fransen wore

clothing that revealed her breasts. Baker testified Fransen got the attention of the men sitting at

the bar when she leaned over. Other testimony suggested that Fransen did not always wear

underwear, and that she wore revealing clothing to expose her breasts. Fishnick and Trustee

Radabaugh testified that three other female bartenders in their mid-20s were hired after Fransen.

Kuhle maintains that the trustees terminated Fishnick (by a 3-2 vote) for his failure to

stay at the anniversary event. Kuhle further maintains that the trustees changed Kelly’s hours to

nights to cover Fishnick’s termination. Kuhle had no valid answer for why Kelly could not keep

her regular day schedule when Fransen could take the evening hours. Kuhle testified that Kelly

was slowing down. However, this seems contradictory to placing her on the evening hours, given

that the evening shift was busier than the day shift. Prior to their terminations, neither Fishnick

nor Kelly had received negative complaints from either patrons or trustees regarding their work

performance.

V. ISSUES ON APPEAL

Reviewing the Petition and Petitioner’s Brief, it is difficult to determine exactly what

issues are appealed. There appears to be three main arguments from Petitioner: 1) the correct

party was not served; 2) volunteer immunity of a non-profit organization; and 3) the Intervenors

were at-will employees that could be terminated for any reason.

A. THE CORRECT PARTY WAS GIVEN PROPER NOTICE OF THIS

PROCEEDING.

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Petitioner argues that the agency has substituted several names into the record as liable

parties without justification, and relief is requested on this ground. Based on the evidence

presented throughout the entirety of these proceedings, it is difficult to determine the Petitioner’s

official legal name. The official legal name appears to be “Dubuque Aerie No. 563 of the

Fraternal Order of Eagles.” Petitioner, by its own admission, has referred to itself in the

following ways: “Dubuque Fraternal Order of Eagles #568,” “Dubuque Fraternal Order of

Eagles #568,” “Fraternal Order of Eagles 568,” “Fraternal Order of Eagles 568 Aerie,” and

“F.O.E. 568 Eagles.” There is no consistency in the name even across documents including two

mortgages, a promissory note, a quitclaim deed, a release of easement and bank statements.

Originally, the contested case was filed against “Dubuque Fraternal Order of Eagles

#568” and Steve Kuhle as two separate respondents. (Cert. Rec. at pg. 234). This name was used

by the Intervenors because it was the name that appeared on their employment pay stubs. The

Dubuque branch of the Fraternal Order received notice of the complaint and fully participated in

every state of the administrative process. (Cert. Rec. at pg. 6-7). The same attorney has

represented both the organization and Kuhle throughout the entire process.

Iowa Rule of Civil Procedure 1.402(5) addresses amendments to pleadings. It allows

correcting the name of a party if the party was served within the statute of limitations period

under a similar but different name. If a pleading that has gone unchallenged until after the trial, it

will be construed as liberally as possible, and aided by every implication and intendment, no

matter how remote, whereas if the attack had been sooner made, it would not be so liberally

construed. Wilson v. Corbin, 41 N.W.2d 702 (Iowa 1950).

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Petitioner has appeared through counsel throughout the entire contested case proceeding

and never raised the issue of being improperly named, including in its post-hearing brief. Aside

from the testimony of a single witness at the remand hearing, Petitioner was unable to point to a

single instance of its attorney or witnesses ever referring to it by its proper legal name during the

hearings or in its filings. The record is clear that the proper party showed up and defended itself

against the claims made by the Intervenors regarding improper discharge of employment.

B. INDIVIDUAL VOLUNTEERS OF A NON-PROFIT ORGANIZATION MAY BE

ENTITLED TO IMMUNITY, BUT THAT DOES NOT ABSOLVE THE

ORGANIZATION AS A WHOLE.

Petitioner argues under Iowa Code Chapter 504.832 that the volunteers of a non-profit

organization cannot be liable unless the standards of liability are such that the challenged

conduct consisted of, or was the result of, an action not in good faith, or that the decision was

made where it was believed not to be in the interest of the corporation, and alternatively that the

directors were not informed to an extent reasonably believed appropriate in the circumstances.

Petitioner asserts that the standards for volunteers of a non-profit organization were followed and

that they acted in “good faith” and “in a manner reasonably believed to be in the best interest of

the corporation.” (Petitioner’s Brief, pg. 1).

In certain instances, a non-profit organization’s volunteers do not face liability for their

illegal acts. Iowa Code Section 504.90 provides that:

1. Except as otherwise provided in this chapter, a director, officer,

employee or member of a corporation is not liable for the

corporations’ debts or obligations and a director, officer,

member or other volunteer is not personally liable in that

capacity to any person for any action taken or failure to take

any action in the discharge of a person’s duties except liability

for any of the following:

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a. The amount of any financial benefit to which the person

is not entitled.

b. An intentional infliction of harm on the corporation or

the members.

c. A violation of section 504.835.

d. An intentional violation of criminal law.

The Final Order of the Administrative Law Judge determined that Kuhle did not face

individual liability for his discriminatory actions as a trustee of the Eagles Club under Iowa Code

Section 504.901. Petitioner argues that it is inconsistent to find that the individual has immunity

but not the organization. Petitioner has provided no authority for this claim and only argues that

such a holding would “render it impossible for any volunteer to understand, how they could

volunteer, act in a reasonable manner, and then they will be found to be immune, but the

organization must pay for the same reasonable action.” (Petitioner’s Brief).

Iowa Code Chapter 504 does not provide immunity for non-profit organizations as a

whole, but only for individual volunteers in specified circumstances. The Iowa Civil Rights

Commission found Kuhle was entitled to this individual statutory immunity. No evidence or

testimony supports the argument that this was unreasonable, arbitrary, capricious, or an abuse of

discretion as required under Iowa Code Chapter 17A. The organization still remains liable for its

own wrongful or illegal acts, including age discrimination, absent evidence to the contrary.

C. AT-WILL EMPLOYEES MAY BE TERMINATED AT ANY TIME FOR ANY

LAWFUL REASON.

Petitioner argues that the right of the employer to terminate at-will employees should be

upheld. Petitioner maintains that the Intervenors were terminated for a proper reason: that the

employees did not wish to work the hours they were assigned.

Under the Iowa Civil Rights Act of 1965,

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1. It shall be an unfair or discriminatory practice for any:

a. Person to refuse to hire, accept, register classify or refer

for employment, to discharge any employee, or to

otherwise discriminate in employment against any

applicant for employment or any employee because of

the age, race, creed, color, sex, sexual orientation,

gender identity, national origin, religion, or disability of

such applicant or employee, unless based upon the

nature of the occupation. (Iowa Code Section

216.6(1)(2013).

In regards to Fishnick, the Commission alleges a single count of disparate treatment,

asserting that Petitioner terminated his employment due to “his age, sex, and/or a combination of

his age and sex.” The claims the Commission alleges on behalf of Kelly are premised on

Petitioner having discriminated against her on the basis of her age.

Discrimination can be established through either direct or indirect evidence. Direct

evidence may include remarks by a decision maker that show a specific link between a

discriminatory basis and the adverse employment action, sufficient to support a finding that the

bias motivated the action. Doucette v. Morrison County, Minn., 763 F.3d 978, 985-86 (8th Cir.

2014). Petitioner seems to argue that because there is no obvious, direct evidence of age

discrimination, discrimination did not occur.

However, where there is evidence of indirect evidence of discrimination, the claim is

analyzed under the McDonnell Douglas burden-shifting framework. Tusing v. Des Moines

Independent Community School Dist., 639 F.3d 507, 515 (8th Cir. 2011). Under this framework,

the Commission has the initial burden to establish a prima facie case of discrimination. Once it

has done so, the burden shifts to the respondent to articulate a legitimate, non-discriminatory

reason for the employment action. If they do so, the burden shifts back to the Commission to

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demonstrate by a preponderance of the evidence that the stated non-discriminatory reason was

merely a pretext for discrimination. Id.

In order to establish a prima facie case of age discrimination, the claimant must typically

prove that: 1) he/she was in the protected class (over age 40), 2) he/she was qualified for the

position, 3) he/she was terminated or suffered adverse employment action, and 4) he/she was

replaced by an individual who was substantially younger. Haigh v. Gelita USA, Inc., 532 F.3d

464, 468 (8th Cir. 2011) (citing Roeben v. BG Excelsior Ltd. P’ship, 545 F.3d 639, 542 (8th Cir.

2008)). No one disputes that both Intervenors were over the age of 40. No one disputes that both

Intervenors were qualified for their position. There is no denial that Fishnick was terminated.

Petitioner asserts that Kelly was not terminated, nor did she suffer adverse employment

action; but rather she chose to quit. The evidence presented establishes that Kelly worked a

standard 28 hours per week with her daytime schedule. With these hours she was able to pay her

bills and live in her downtown home. The changing of her schedule would have resulted in a

reduction down to 14 hours per week. (Cert. Rec. at pg. 307). Under these circumstances, Kelly

did suffer an adverse employment action. Her guaranteed weekly hours were reduced by almost

half, even assuming she could get a couple extra hours on Saturday nights if the bar stayed open

late.

Finally, the record is clear that both Intervenors were replaced by individuals who were

substantially younger. Fransen was a young woman that started her employment right before

Intervenors were fired. She wore inappropriate clothing that exposed her breasts and allowed

patrons to recognize when she wasn’t wearing underwear. There were multiple reports of

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statements about wanting some “eye candy” in the bar. There was testimony that after the

Intervenors were no longer employed, three other women in their mid-20s were hired.

The Intervenors established a prima facie case that they suffered discrimination based on

their age. The burden then shifted to Petitioner to articulate a legitimate non-discriminatory

reason for the employment action. Kuhle was only able to say that Fishnick was terminated for

not staying at an event that was fully staffed, and that Kelly wasn’t fired because she walked out

after her hours were changed. Even giving Petitioner the benefit of the doubt for the reasons

offered, based on the evidence presented, these reasons are weak and appear to be nothing more

than a pretext for wanting younger women in the bar to bring in more clientele.

VI. CONCLUSION

Petitioner bears the burden of proof to establish that the agency’s action was not

supported by substantial evidence within the record. This burden was not met. Petitioner could

not establish a legitimate, non-pretexual reason for terminating Fishnick and Kelly. There is

substantial evidence in the record that Petitioner discriminated against Fishnick and Kelly

because of their ages. The organization is not entitled to any sort of immunity. Petitioner was

served with notice of this action from the beginning, and the correct party appeared at all levels

of the proceeding. Nothing in the record indicates that the agency’s application of law to the

facts was irrational, illogical, or wholly unjustifiable.

IT IS THEREFORE ORDERED that the agency’s final decision is AFFIRMED. Costs

shall be assessed against Petitioner.

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State of Iowa Courts

Type: OTHER ORDER

Case Number Case Title

CVCV106156 KUHLE V IOWA CIVIL RIGHTS COMMISSION

So Ordered

Electronically signed on 2018-02-19 14:41:45 page 13 of 13

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