Frosburg v. State Department of Personnel

Liss, J., delivered the opinion of the Court. The appellants in this appeal are Richard S. Frosburg and nine other employees of the Motor Vehicle Administration, Department of Transportation. The appellees are the State Department of Personnel, Henry C. Bosz, Secretary of Personnel, and Joan R. Nasdor, Employee Relations Arbitrator of the Department of Personnel. The appeal is filed from an order of the Baltimore City Court (Greenfeld, J.) dismissing an appeal taken by the employees from an opinion and decision reached by the Arbitrator after a hearing on a Fifth (and final) Step Grievance Appeal.

Appellants’ appeal to this Court is filed pursuant to the Administrative Procedure Act. 1 The facts in this case are not in dispute. The ten appellants at the time this litigation arose and for a number of years previously were employed as Drivers License Reviewers by the Motor Vehicle Administration. That ²⁰ classification had been created under State Civil Service regulations several decades ago and at the time of the dispute the appellants were paid the salary set in Salary Grade 10, providing for an annual salary of $7,672 to $10,800 (maximum reached in six years). On December 3,1971, pursuant to his statutory power and obligation, 2 Bosz created two new classifications of employees.

In each of these new classes, a minimum educational requirement was a Bachelor or Juris Doctor Degree in law from an accredited law school. This was not a requirement for employment as a Drivers License Reviewer. When appointments were made to the new positions of Hearing Officers I and II the work assigned to be performed by them was essentially the same as that performed by the Drivers License Reviewers. The same type of cases were heard and decided by the employees interchangeably without regard to whether the employee did or did not have a law degree.

While the employees were in fact performing substantially identical work the Hearing Officers were being paid at Salary Grade 15 and the Drivers License Reviewers at Salary Grade 10. This situation resulted in the employees designated as Drivers License Reviewers filing two grievances in which they alleged as follows — that the specifications creating Hearing Officers I and II were class-act discriminatory in that the minimal education requirements precluded the Drivers License Reviewers from being considered for the new positions although the nature of work provisions listed in detail types of work that the Reviewers had performed satisfactorily in the past; and secondly, the Reviewers were being underpaid by reason of their classification and the work they were required to do. Thereafter the grievances moved through the bureaucratic jungle until reaching the nirvana, the “Fifth Step,” the final ²¹ adjudicatory hearing presided over by the Arbitrator in this case, Joan R. Nasdor. A full hearing was held before her, testimony was taken, documents were offered into evidence, and arguments submitted.

The Arbitrator rendered her written opinion and decision on November 13, 1974. In her opinion the Arbitrator noted that the Motor Vehicle Administration had employed Drivers License Reviewers for some 30 years without requiring a law degree for the job. Some of the Reviewers had performed services identical to those of the Hearing Officers for more than ten years without such a degree. She found that the new employees, Hearing Officers I and II, performed the same function as the Reviewers but at substantially higher salaries.

She recognized that salary adjustment should be made for the Reviewers but declined to decide the “best course of action to alleviate the inequity” until a pending study had been completed. The appellants appealed from this decision to the Baltimore City Court (Murphy, J.) and also filed a petition for a writ of mandamus to compel the Arbitrator to decide the case. The case was remanded to the Arbitrator with instructions that she render a final determination on the Fifth Step Grievance after a study by the Classification and Compensation Division had been completed. That study found that the differences between the duties and responsibilities assigned to the Reviewers and Hearing Officers were minimal, occurring in something less than 1% of the cases decided by them, and that the Reviewers should be upgraded to reflect the appropriate salary level for the duties which they were required to perform.

A second hearing was held before the Arbitrator and on September 4, 1975, she rendered a written opinion in which she stated: “Logic and reason compel and persuade by abundantly clear and convincing evidence that the Drivers License Reviewers should be reclassified to Grade 15 effective immediately with this order.” Her order also abolished the classification of Drivers License Reviewer. The Arbitrator did not, however, order that back pay be awarded the appellants from the time of filing the first grievance to ²² the date of reclassification, nor was any explanation given as to the reason for the Arbitrator’s failure to award back pay. The entire issue of back pay was ignored by the Arbitrator’s decision and order and from the record we are unable to determine whether that issue was ever considered by her. The appellants appealed to the Baltimore City Court on the sole issue of the failure of the Arbitrator to award back pay.

The matter came on for hearing before the trial court, arguments were made and memoranda were submitted. It was at this point in the proceedings that the defense of sovereign immunity was raised for the first time on behalf of the State agency. The trial court concluded that the allowance of back pay was barred by sovereign immunity and dismissed the appeal. It is from that order of dismissal that this appeal was seasonably filed.

The appellants urge that the trial court erred in holding that the doctrine of sovereign immunity barred their recovery of the retroactive pay which they claimed was due them from the time of filing the first grievance on December 13, 1972 to September 4, 1975, when the appellants were reclassified at the Grade 15 salary level. The doctrine of sovereign immunity originated in feudal England on the theory that the highest feudal lord was not subject to suit in his own courts. The doctrine was firmly embedded in the common law and was adopted by the new nation when the American democracy was established. 3 A period of ferment ensued before the status of the doctrine in the law of the land was firmly established. In Maryland by Chapter 53 of the Laws of 1786 the General Assembly adopted a statute which stated “that any citizen of this State, having any claim against this State for money may commence and prosecute his action at law for the same against this State as defendant.” The Act provided for juries to try the issues and the power of the jury to award “such ²³ damages as they think just, and the same shall be paid by the State.” That statute was repealed by Chapter 210 of the Acts of 1820.

See Calvert Associates v. Department of Employment and Social Services, 277 Md. 372 , 357 A. 2d 839 (1976). The Supreme Court in 1793 decided in Chisholm v. Georgia, 2 U. S. (2 Dall) 419, 1 L. Ed 440, that Article III, section 2 of the United States Constitution gave jurisdiction to federal courts to adjudicate “controversies between a State and Citizens of another State” irrespective of an assertion of sovereign immunity by the defendant State. The first ten amendments to the Constitution had been adopted as the Bill of Rights as part of the original United States Constitution.

The reaction to Chisholm was so strong and immediate that the Eleventh Amendment 4 restricting the judicial power of the Federal Government was adopted in 1798. That amendment effectively reversed the Supreme Court’s holding in Chisholm. The Court of Appeals in its decision in State v. Baltimore and Ohio R. R. Co., 34 Md. 344, 374 (1871), stated that sovereign immunity “belongs to the State by reason of her prerogative as a sovereign, and on grounds of public policy. Parties having claims or demands against her must present them through another department of the Government — the Legislature — and cannot assert them by suit in the courts.” That rationale has been followed consistently in succeeding Maryland cases.

See Godwin v. County Commissioners, 256 Md. 326 , 260 A. 2d 295 (1970), where the Court of Appeals in an extensive discussion of the doctrine stated: “As applied in Maryland, the doctrine of sovereign immunity is not only applicable to the State, itself, as a governmental agency, but is also applicable to its agencies and instrumentalities, including its municipal political sub-divisions, if ²⁴ engaged in a governmental function as an agent of the State, unless the General Assembly either directly or by necessary implication has waived the immunity.” Id. at 334 , 260 A. 2d at 299 . See also Stanley v. Mellor, 168 Md. 465 , 178 A. 106 (1935); Red Star Line v. Baughman, 153 Md. 607 , 139 A. 291 (1927). In University of Maryland v. Maas, 173 Md. 554 , 197 A. 123 (1938), the Court of Appeals held that absent legislative authority and appropriations or provisions for the payment of damages, a suit for damages could not be maintained against the State or one of its agencies. It said at p. 559: “So it is established that neither in contract nor tort can a suit be maintained against a government agency, first, where specific legislative authority has not been given, second, even though such authority is given, if there are no funds available for the satisfaction of the judgment, or no power reposed in the agency for the raising of funds necessary to satisfy a recovery against it.” Eminent co-counsel for the appellants, Wilson K. Barnes, formerly an Associate Judge of the Maryland Court of Appeals, spoke for that Court in a case involving the doctrine of sovereign immunity in Maryland, Jekofsky v. State Roads Commission, 264 Md. 471 , 287 A. 2d 40 (1972).

In upholding the doctrine Judge Barnes said: “Quite apart from our prior decisions, it is desirable and in the public interest that any change in the doctrine of sovereign immunity should come from the legislative branch of the State Government rather than from the judicial branch inasmuch as there are fiscal considerations, administrative difficulties and other problems in balancing the rights of the State and its agencies with new possible rights of the individual citizens, which can far better be considered and resolved by ²⁵ the legislative branch than by the judiciary of the State.” Id. at 474 , 287 A. 2d at 42 . The Court of Appeals has recognized the fact that the doctrine of sovereign immunity has been under attack by the legal commentators 5 but has remained steadfast in its conclusion that in Maryland, at least, it is a viable defense until the legislature declares otherwise. Two cases dealing with the doctrine of sovereign immunity were recently decided by the Court of Appeals. Judge Singley in American Structures v. City of Baltimore, 278 Md. 356 , 364 A. 2d 55 (1976), stated: “In Maryland the rule of our cases is clear.

If an action is brought for a money judgment in contract or in tort against the State or an agency of the State without the State’s consent, actual or implied, it must be defended on the ground of sovereign immunity, which cannot be waived unless funds have been appropriated for the purpose or the agency can provide funds by taxation . . . .” (Citations omitted) Id. at 359 , 364 A. 2d at 56 . In Board of Trustees of Howard Community College v. John K. Ruff, Inc., 278 Md. 580 , 366 A. 2d 360 (1976), Judge Orth, speaking for the Court, reaffirmed the conclusion reached in American Structures, 6 This brings us then to a consideration of the specific factual situation presented by this appeal. The record makes it clear that the trial court concluded, as did the Arbitrator, that the appellants had been improperly classified in the ²⁶ Grade 10 category for several years. The appellants urge, therefore, that the legal proposition that an improperly discharged or demoted public employee is entitled, upon reinstatement, to back pay for the period of improper discharge or demotion is dispositive of this case.

People, ex rel. Bourne v. Johnson, 32 Ill. 2d 324 , 205 N.E.2d 470 (1965); Rozmierski v. Newark, 42 N.J. Super 14, 125 A. 2d 747 (1956 Sup. Ct.); Craigie v. City of New York, 114 App. Div. 880 , 100 N.Y.S. 197 (1906 Sup. Ct., App. Div.).

See also 4 McQuillen, Municipal Corporations §§ 12.188, 12.206 and 12.270 (3rd ed. 1951). They suggest that there is no conceptual difference between the improper discharges and demotions (involved in the cases cited in McQuillen, supra) and the improper classifications in the case at bar. There are two reasons why this contention is not correct. First, the cases cited* by the appellants all concern themselves with discharge, suspension and demotion.

In this case, however, wé are not considering a claim that the appellants have been .denied the benefits of a position to which they were appointed. Instead, the contention is that the appellants have been denied the benefits of the position to which they should have been, but were not, appointed. There is a discernible difference under the Maryland Merit System between an improper discharge, suspension or demotion and an improper classification. Procedures for discharge, suspension and demotion are specifically set out in §§ 31, 33 and 36 of Article 64A and such actions may be taken only for cause.

The right to a hearing is specifically granted in these types of cases. No such provision is made by statute in the matter of wrongful classification. The only redress is contained in Department of Personnel Policy No. 9 adopted by Executive Order of the Governor (Maryland Code (1977 Rept. Vol,) V61. 9A at pp. 612-14. 7 ) wMéh. sets up the Grievance Procedure.

It should be noted further that ²⁷ discharge, suspension and demotion are distinguishable from improper classification since the former represent affirmative actions of a punitive nature taken by an agency against an employee, while misclassification is, at the most, inaction on the part of the State rather than an affirmative attempt to alter the employee’s status. The established rule is that one is not entitled to the benefit of a position until he has been duly appointed to it. United States v. McLean, 95 U. S. 750 , 24 L. Ed. 579 (1876); Ganse v. United States, 180 Ct. Cl. 183 , 376 F. 2d 900 (1967). Secondly, the appellants’ cases do not involve circumstances in which the defense of sovereign immunity was raised.

Appellants contend that the doctrine of sovereign immunity is inapplicable because the State failed to raise the defense by appropriate motion, apd,more importantly, the defense is waived because of the,. Administrative Procedure Act. Md. Code (1957,1971 Repl. Voh) Art. 41.

To appellants’ contention that the defense of sovereign immunity was not properly raised by the appellees below, there are