Rouse v. Forsyth Cty. Dep't Soc. Servs. ( 2020 )

IN THE SUPREME COURT OF NORTH CAROLINA
No. 1PA19
Filed 28 February 2020
TERESSA B. ROUSE, Petitioner
v.
FORSYTH COUNTY DEPARTMENT OF SOCIAL SERVICES, Respondent
On discretionary review pursuant to N.C.G.S. § 7A-31 of a unanimous decision
of the Court of Appeals, 822 S.E.2d 100 (N.C. Ct. App. 2018), affirming, in part, and
vacating, in part, a final decision entered on 18 April 2017 by Administrative Law
Judge J. Randall May in the Office of Administrative Hearings. Heard in the
Supreme Court on 10 December 2019.
Elliot Morgan Parsonage, PLLC, by Benjamin P. Winikoff, Robert M. Elliot,
and J. Griffin Morgan, for petitioner-appellant.
Office of Forsyth County Attorney, by Assistant County Attorney Gloria L.
Woods, for respondent-appellee.
Tin Fulton Walker & Owen, PLLC, by John W. Gresham, and Edelstein &
Payne, by M. Travis Payne, for North Carolina Advocates for Justice, amicus
curiae.
ERVIN, Justice.
This case presents the question of whether an administrative law judge has
the authority to award back pay and attorneys’ fees to local government employees
protected under the North Carolina Human Resources Act who prevail in a wrongful
ROUSE V. FORSYTH CTY. DEP’T OF SOC. SERVS.
Opinion of the Court
termination proceeding before the Office of Administrative Hearings. In view of the
fact that N.C.G.S. § 126-34.02 explicitly provides that an administrative law judge
has the authority to award back pay and attorneys’ fees to any protected state and
local government employee, we reverse the Court of Appeals’ decision to the contrary
and remand this case to the Court of Appeals for further proceedings not inconsistent
with this opinion.
Petitioner Teressa B. Rouse worked for respondent Forsyth County
Department of Social Services for nineteen years, with her most recent employment
being as a Senior Social Worker working in the After Hours Unit, where her job duties
included receiving and screening juvenile abuse, neglect, and dependency reports. On
20 June 2016, Ms. Rouse met a father, who was accompanied by his son, who claimed
to be homeless, and who inquired about the possibility that his son might be placed
in foster care. After Ms. Rouse explained the circumstances under which the son
could be placed in foster care, the father declined to pursue that option any further.
Upon making this decision, the father contacted the son’s mother using Ms.
Rouse’s phone and learned that the mother did not want her son to live in her home.
While speaking with Ms. Rouse, the mother explained her refusal to provide a home
for the son by stating that the son had previously molested her daughters. Upon
receiving this information, Ms. Rouse questioned the mother concerning whether she
had filed a report or contacted law enforcement officers about the son’s alleged
conduct and received a negative response. Subsequently, the mother recanted her
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allegation against the son, stating that she did not say that her son had molested her
daughters and that she had only meant to say that the son had “tendencies.” In
addition, the father and the son each denied the mother’s allegation. Ultimately, Ms.
Rouse concluded that the mother’s initial statement was not entitled to any credence
and that there was no basis for believing that any sexual abuse had actually occurred.
After the mother promised to give the son’s housing situation further thought,
the father contacted the child’s paternal grandmother and made arrangements for
her to house the son that night. On the following day, the mother contacted Ms.
Rouse and agreed to allow the son to stay at her residence. Ms. Rouse took no further
action with respect to the mother’s initial allegation that the son had sexually abused
her daughters.
In mid-July 2016, the Forsyth County DSS received a request for assistance
from the Wilkes County Department of Social Services arising from a 16 July 2016
allegation that the son had sexually molested his sisters. On 22 September 2016, the
Department dismissed Ms. Rouse from its employment on the grounds that her
alleged mishandling of the mother’s allegation that the son had sexually abused her
daughters provided just cause for the termination of Ms. Rouse’s employment based
upon grossly inefficient job performance and unacceptable personal conduct.
On 21 October 2016, Ms. Rouse filed a contested case petition with the Office
of Administrative Hearings in which she alleged that the Department had (1) failed
to follow the proper procedures prior to making the dismissal decision, (2) failed to
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follow the proper procedures in dismissing her from its employment, and
(3) dismissed her from its employment without just cause. An evidentiary hearing
was held in this case on 31 January 2017 before the administrative law judge. On 18
April 2017, the administrative law judge entered an order reversing the Department’s
decision to terminate Ms. Rouse’s employment on the grounds that the Department
had violated Ms. Rouse’s procedural rights and lacked just cause to dismiss Ms. Rouse
from its employment. In light of this decision, the administrative law judge ordered
the Department to reinstate Ms. Rouse “to her position as Senior Social Worker, or
comparable position . . . with all applicable back pay and benefits” and to pay Ms.
Rouse’s attorneys’ fees. The Department noted an appeal to the Court of Appeals
from the administrative law judge’s order.
In seeking relief from the administrative law judge’s order before the Court of
Appeals, the Department contended that the administrative law judge had erred by
concluding that it had violated Ms. Rouse’s procedural rights and lacked the just
cause necessary to support the decision to dismiss Ms. Rouse from its employment
and by awarding Ms. Rouse back pay and attorneys’ fees. On 6 November 2018, the
Court of Appeals filed an opinion affirming the administrative law judge’s decision,
in part, and vacating that decision, in part. Rouse v. Forsyth Cty. Dep’t of Soc. Servs.,
822 S.E.2d 100, 113 (N.C. Ct. App. 2018). As an initial matter, the Court of Appeals
upheld the administrative law judge’s decision to overturn the Department’s
dismissal decision on the grounds that the record developed before the administrative
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law judge “provided substantial evidence to support [its] findings of fact and the
conclusions of law” that Ms. Rouse had not engaged in grossly inefficient job
performance or unacceptable personal conduct Id. at 102. On the other hand, acting
in reliance upon its prior decision in Watlington v. Dep’t of Soc. Servs. Rockingham
Cty., 252 N.C. App. 512, 799 S.E.2d 396 (2017), the Court of Appeals concluded that
the administrative law judge lacked the authority to award back pay and attorneys’
fees to Ms. Rouse on the grounds that the administrative regulations contained in
Title 25, Subchapter I, of the North Carolina Administrative Code and the statutory
provisions embodied in N.C.G.S. § 150B-33(b)(11) did not provide for the making of
such awards for local government employees wrongfully discharged in violation of the
North Carolina Human Resources Act. Rouse, 822 S.E.2d at 113. On 10 May 2019,
this Court allowed Ms. Rouse’s request for discretionary review of that portion of the
Court of Appeals’ decision holding that the administrative law judge lacked the
authority to award her back pay and attorneys’ fees.1
In seeking to persuade us to overturn the Court of Appeals’ decision with
respect to the backpay and attorneys’ fees issue, Ms. Rouse points out that, in
accordance with N.C.G.S. § 126-5(a), employees of local departments of social services
1 Although this Court denied the Department’s request for discretionary review of the
Court of Appeals’ decision to uphold the administrative law judge’s decision that Ms. Rouse
had been wrongfully dismissed, the Department devoted a substantial portion of its brief
before this Court to an argument that the administrative law judge had reached the wrong
result with respect to the wrongful discharge issue. Needless to say, the wrongful discharge
issue is not before this Court, see N.C.R. App. P. 16(a), so we decline to address that issue
any further in this opinion.
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are protected under the relevant provisions of the North Carolina Human Resources
Act. According to Ms. Rouse, N.C.G.S. § 126-34.02(a)(3) authorizes an administrative
law judge who determines that a protected employee has been unlawfully discharged
to “[d]irect other suitable action to correct the abuse which may include the
requirement of payment for any loss of salary which has resulted from the improper
action of the appointing authority.” As a result, Ms. Rouse argues that “the same
statute that authorized the [administrative law judge] to reinstate [Ms.] Rouse
authorized the [administrative law judge] to award backpay as payment for her two-
year loss of salary,” with the absence of any administrative rule authorizing an award
of backpay having “no effect on the statutory mandate of N.C.[G.S.] § 126-34.02,
which provided the authority to [the administrative law judge] to grant [Ms.] Rouse
the remedies of payment for loss of salary and attorneys’ fees.” As a result, for this
and other reasons, Ms. Rouse urges us to reinstate the administrative law judge’s
backpay award.
Similarly, Ms. Rouse argues that N.C.G.S. § 126-34.02(e) “permits an award of
attorneys’ fees to all employees subject to the [North Carolina Human Resources Act],
including local government employees.” According to Ms. Rouse, the Court of
Appeals’ focus upon the absence of any language in N.C.G.S. § 150B-33(b)(11)
authorizing attorneys’ fee awards to unlawfully discharged local government
employees “ignor[es] the explicit mandate of N.C.[G.S.] § 126-34.02 and fail[s] to
reconcile the two statutes [so as] to give effect to both.” For that reason, Ms. Rouse
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contends that the Court of Appeals erred by setting aside the administrative law
judge’s attorneys’ fee award as well.
The Department, on the other hand, argues that personnel actions involving
State employees are governed by Subchapter J of Title 25 of the North Carolina
Administrative Code, while personnel actions involving local government employees
are subject to Subchapter I. As a result of the fact that the regulation authorizing
back pay awards to local government employees expired on 1 November 2014, “[n]o
remedies were set out in the amendments for local government employees at the time
of the decision in this matter.” According to the Department, “[t]he application of 25
[N.C. Admin. Code] Subchapter 01I exclusively to local government employees for
rights and remedies was settled before the [administrative law judge] decision in this
case” in Watlington, with there being “a host of other [ ] provisions” of the North
Carolina Human Resources Act that are limited to state employees and with there
being “no express statutory provision under the [North Carolina Human Resources
Act] or regulatory provisions at the time of the decision in this matter which
specifically authorizes an award of attorneys’ fees to local government employees
effective as of [Ms. Rouse’s] dismissal.” In view of the fact that the Court of Appeals
held in Watlington “that it was erroneous to award backpay and attorneys’ fees to a
local government employee under 25 [N.C. Admin. Code] Subchapter J at the time of
the decision[,]” the Department also argues that “it was [also] error for the
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[administrative law judge] just a few days later . . . to apply Subchapter 01J to this
matter and award back pay and attorneys’ fees.”
The General Assembly enacted the North Carolina Human Resources Act “to
establish for the government of the State a system of personnel administration under
the Governor, based on accepted principles of personnel administration and applying
the best methods as evolved in government and industry.” N.C.G.S. § 126-1 (2019).
The North Carolina Human Resources Act applies to all State employees that are not
exempted from its coverage and to the employees of certain local entities, including
local departments of social services. Id. § 126-5(a)(1), (2)(b). According to N.C.G.S.
§ 126-34.02(a), once an agency whose employees are protected by the North Carolina
Human Resources Act makes a final decision to terminate a protected employee2 from
its employment, the adversely affected employee “may file a contested case in the
Office of Administrative Hearings under Article 3 of Chapter 150B of the General
Statutes,” id. § 126-34.02(a), and may seek relief from the agency’s termination
decision on the grounds “that he or she was dismissed, demoted, or suspended for
disciplinary reasons without just cause.” Id. § 126-34.02(b)(3). In the event that the
administrative law judge upholds the validity of the employee’s challenge to his or
her dismissal, demotion, or suspension, it may:
(1) Reinstate any employee to the position from which
the employee has been removed.
2 The Department does not contend that Ms. Rouse is not a protected employee for
purposes of the North Carolina Human Resources Act.
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(2) Order the employment, promotion, transfer, or
salary adjustment of any individual to whom it has been
wrongfully denied.
(3) Direct other suitable action to correct the abuse
which may include the requirement of payment for any loss
of salary which has resulted from the improper action of
the appointing authority.
Id. § 126-34.02(a). In addition, an administrative law judge “may award attorneys’
fees to an employee where reinstatement or back pay is ordered.” Id. § 126-34.02(e).
As a result, an administrative law judge who has determined that a protected
employee has been discharged from his or her employment by a covered agency
without just cause is statutorily authorized to award back pay and attorneys’ fees to
the wrongfully discharged employee.
In holding that the administrative law judge lacked the authority to award
back pay to Ms. Rouse after determining that she had been wrongfully discharged
from the Department’s employment, the Court of Appeals began by pointing out that
Ms. Rouse was a local government, rather than a state, employee and that
Subchapter I of Title 25 of the North Carolina Administrative Code contained no
provision authorizing an award of back pay to wrongfully discharged local
government employees. Rouse, 822 S.E.2d at 113 (noting that the Court of Appeals
“has held that Title 25’s Subchapter J applies to State employees, while Subchapter
I applies to local government employees” (citing Watlington, 252 N.C. App. at 523,
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799 S.E.2d at 403)).3 In view of the fact that nothing in Subchapter I of Title 25 of
the North Carolina Administrative Code mentioned the availability of backpay
awards to wrongfully discharged local government employees, the Court of Appeals
concluded that backpay was not one of the remedies to which such wrongfully
discharged employees might be entitled. Id.; see also Watlington, 252 N.C. App. at
526, 799 S.E.2d 404. As a result, as was the case in Watlington, the Court of Appeals
concluded that the administrative law judge lacked the authority to award back pay
to Ms. Rouse despite the fact that she had been wrongfully discharged from the
Department’s employment. Rouse, 822 S.E.2d at 113.
3 Prior to 30 November 2014, Title 25, Subchapter B of the North Carolina
Administrative Code provided for backpay awards in in appeals by allegedly aggrieved state
and protected local government employees to the State Personnel Commission, 25 N.C.
Admin. Code 1B.0421 (2014), which served as the factfinding body in public employee
wrongful discharge cases at that time. See N.C.G.S. § 126-37 (2009) (repealed 2013). This
provision of Title 25, Subchapter B expired on 30 November 2014, 25 N.C. Admin. Code
1B.0421 (Supp. Jan. 2015), with no replacement regulation applicable to protected local
government employees ever having been adopted. In 2011, the General Assembly amended
N.C.G.S. § 126-37 to provide that the Office of Administrative Hearings, rather than the State
Personnel Commission, would have factfinding authority in cases involving alleged wrongful
dismissals and other prohibited adverse personnel actions directed to protected state and
local employees. Act of June 18, 2011, S.L. 2011-398, § 44, 2011 N.C. Sess. Laws 1678, 1693–
94. In 2013, the General Assembly repealed N.C.G.S. § 126-37 and replaced it with N.C.G.S.
§ 126-34.02, while continuing to assign factfinding responsibility to the Office of
Administrative Hearings rather than reassigning it to the Human Resources Commission.
Act of July 25, 2013, S.L. 2013–382, § 6.1, 2013 N.C. Sess. Laws 1559, 1564–70. The Human
Resources Commission’s failure to replace 25 N.C. Admin. Code 1B.0421 with an equivalent
provision applicable to protected local government employees following its expiration
resulted in the absence of any regulation specifically authorizing the making of backpay
awards to unlawfully discharged local government employees upon which the Court of
Appeals relied in Watlington. See Watlington, 252 N.C. App. 526, 799 S.E.2d at 404.
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The Court of Appeals’ determination that the absence of any regulatory
provision authorizing an award of back pay to an unlawfully discharged local
government employee precludes the making of such an award in spite of the fact that
the relevant statutory provisions clearly authorize the making of such an award rests
upon a fundamental misapprehension of the relative importance of statutory
provisions and administrative regulations. Simply put, the absence of an
implementing regulation has no bearing upon the extent to which a statutory remedy
is available to a successful litigant. On the contrary, “[w]hatever force and effect a
rule or regulation has is derived entirely from the statute under which it is enacted.”
Swaney v. Peden Steel Co., 259 N.C. 531, 542, 131 S.E.2d 601, 609 (1963) (ellipsis
omitted) (citation omitted). For that reason, the Court of Appeals has long recognized
that “[a]n administrative agency has no power to promulgate rules and regulations
which alter or add to the law it was set up to administer or which have the effect of
substantive law.” State of North Carolina ex rel. Comm’r of Ins. v. Integon Life Ins.
Co., 28 N.C. App. 7, 11, 220 S.E.2d 409, 412 (1975) (citations omitted). Similarly, in
the absence of legislative language making the effectiveness of a particular statutory
provision contingent upon the promulgation of related administrative regulations,
the fact that the provisions of a properly enacted statute are not mirrored in the
related administrative regulations has no bearing upon the extent to which the
relevant statutory provision is entitled to be given full force and effect. As a result,
given that Ms. Rouse was a protected employee for purposes of the North Carolina
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Human Resources Act,4 the fact that an administrative law judge is explicitly
authorized by N.C.G.S. § 126-34.02(a)(3) to award backpay to a wrongfully discharged
state or local government employee conclusively resolves the issue of whether the
administrative law judge had the authority to require that Ms. Rouse receive
backpay.
Similarly, the Court of Appeals failed to rely upon the relevant statutory
provision in determining that the administrative law judge lacked the authority to
require the Department to pay attorneys’ fees to Ms. Rouse. To be sure, N.C.G.S.
§ 150B-33(b)(11) provides that “[a]n administrative law judge may . . . [o]rder the
assessment of reasonable attorneys’ fees . . . against the State agency involved in
contested cases decided . . . under Chapter 126 where the administrative law judge
finds discrimination, harassment, or orders reinstatement or back pay.” N.C.G.S.
§ 150B-33(b)(11) (2019) (emphasis added). Although section 150B-33(b)(11) does not,
as the Court of Appeals noted, provide for an award of attorneys’ fees to unlawfully
discharged local employees, the absence of any reference to such an attorneys’ fee
award in that statutory provision has no bearing upon the proper resolution of the
4 On 1 July 2018, the Forsyth County Board of Commissioners approved the creation
of a consolidated human services agency that combined the existing Forsyth County social
services and public health departments. See Fran Daniel, Forsyth County Commissioners
Vote to Consolidate DSS and Public Health Departments, Winston-Salem J., (June 21, 2018),
https://perma.cc/MK52-Q97C. Although the North Carolina Human Resources Act does not
provide any protections to the employees of such a consolidated human services agency, see
N.C.G.S. § 126-5(a)(2) (2019), Ms. Rouse was never employed by the consolidated human
services agency and retained her rights as an employee of a county department of social
services at the time of her termination from the Department’s employment.
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issue of whether the administrative law judge had the authority to award attorneys’
fees to Ms. Rouse given that, as we have already noted, N.C.G.S. § 126-34.02(e)
expressly authorizes an administrative law judge to “award attorneys’ fees to an
employee where reinstatement or back pay is ordered.” Id. § 126-34.02(e). In other
words, the fact that N.C.G.S. § 150B-33(b)(11) makes no reference to the making of
an attorneys’ fee award to a wrongfully discharged local government employee has no
bearing upon the issue of whether such an award is authorized for unlawfully
discharged local government employees by N.C.G.S. § 126-34.02(e).
Thus, for the reasons set forth in more detail above, the administrative law
judge had ample, express statutory authority to award back pay and attorneys’ fees
to Ms. Rouse. The fact that such remedies are not provided for in Subchapter I of
Title 25 of the North Carolina Administrative Code or authorized by N.C.G.S. § 150B-
33(b)(11) provides no basis for the decisions reached by the Court of Appeals in this
case and in Watlington, the relevant portions of which we expressly overrule. As a
result, the Court of Appeals’ decision to invalidate the administrative law judge’s
decision to award back pay and attorneys’ fees to Ms. Rouse is reversed and this case
is remanded to the Court of Appeals for further proceedings not inconsistent with this
opinion.5
5 In its brief to this Court, the Department argued that the administrative law judge
had failed to make certain required findings of fact prior to awarding attorneys’ fees to Ms.
Rouse, citing Hunt v. Dep’t of Pub. Safety, 817 S.E.2d 257 (N.C. Ct. App. 2018). The
Department did not, however, advance this argument before the Court of Appeals or seek to
present it for our consideration in its discretionary review petition. As a result, we decline
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REVERSED AND REMANDED.
to entertain this argument and will not address it further. See Higgins v. Simmons, 324 N.C.
100, 103, 376 S.E.2d 449, 452 (1989) (stating that “a contention not made in the court below
may not be raised for the first time on appeal”); see also N.C.R. App. P. 10(a)(1), 16(a).
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