In the summer of 2010, Lawrence Township, Indiana was in serious discussions with the City of Indianapolis regarding the Lawrence Township Fire Department merging with the Indianapolis Fire Department. Before any merger could take place, however, the Township had to make certain adjustments to the ranks of its officers. Indianapolis was willing to accept only 15 officers (five captains and ten lieutenants), and would not accept any battalion chiefs. The Township had 13 captains, 15 lieutenants, and 10 battalion chiefs. All in all, there remain 35 fire officers in the Township for only 15 available spots in the Indianapolis Fire Department.
The Township asked its Merit Commission to modify the ranks in the Department to conform to the proposed merger structure. In July 2010, the Commission adopted a resolution that left the Department with five captains, 10 lieutenants, and five alternates. All other fire officers were demoted to the rank of firefighter. A group of fire officers sued the Township, contending that their demotions violated due process.
The Indiana Court of Appeals dismissed the lawsuit. The Court found that “Indiana courts have long recognized such an exception to the necessity of due process procedures required in police and firefighter discipline, including when an officer is demoted. The membership of the department may be reduced for economic reasons, and dismissal on that ground does not violate the rights of the officer. At the same time, this power to reduce the force on the ground of the economy must be exercised in good faith, and where it appears that the dismissal was for the ultimate and actual purpose of creating a vacancy.”
The Court found that “the crucial distinction is that of person-directed and position-directed personnel actions. Person-directed actions are those where a person is discharged for cause from an existing position for allegations of misconduct, unfitness for office, political affiliation, or for no reason at all. In these cases, the statutory due process protections are appropriate and necessary before termination. Such statutory protections do not apply to position-directed actions, where the position itself disappears due to a determination by the public entity that it is no longer needed or affordable. If there is a factual basis for his claim, the remedy for the aggrieved officer whose position was eliminated due to economic reasons is to file suit alleging that the action was not taken in good faith.”
The Court then turned to the evidence as to whether the Township’s actions fell within the scope of “good faith.” The Court began with definitions: “The absence of good faith is bad faith, but bad faith is simply not bad judgment or negligence. Rather, it implies the conscious doing of a wrong because of dishonest purpose or moral obliquity. It is different from the negative idea of negligence in that it contemplates a state of mind affirmatively operating with furtive design or ill-will.”
Turning to the facts before it, the Court ruled: “As evidence of economic necessity and good faith, the Township points to testimony that the Department had a $3.2 million operating fund deficit that was ‘dire’ and that Lawrence could no longer afford a fire department as it was situated and structured. The fire officers point to evidence suggesting that the Department’s economic situation was not dire, and that the Township had alternatives to the merger such as taking out an emergency loan. While this evidence may raise a factual dispute as to desirable fiscal solutions, none of it calls into question the Township’s good faith.”
Castetter v. Township, 2011 WL 5075134 (Ind. App. 2011).
The article appears in our January 2012 issue.