2010-161 Appeal of School Administrative Unit #44 (New Hampshire State Board of Education)

Sulloway & Hollis, P.L.L.C.

No. 2010-161

State Board of Education

We affirm in part, reverse in part, and remand. procedural due process rights under both the State and Federal Constitutions. witness. McGann cross-appeals, alleging numerous violations of her expert witness denied McGann a meaningful right to cross-examine that decision that its failure to provide pre-hearing discovery with respect to its Unit #44 (SAU). The SAU seeks review of the State Board of Education’s Judith McGann, as superintendent of the petitioner, School Administrative ___________________________ DUGGAN, J. This case concerns the termination of the respondent,

Theodore E. Comstock

Bernstein Shur, P.A.

the New Hampshire School Boards Association, as amicus curiae.

THE SUPREME COURT OF NEW HAMPSHIRE G. Aslin on the brief, and Mr. Volinsky orally), for the respondent.

Catenza on the brief, and Mr. Kaplan orally), for the petitioner.

page is: http://www.courts.state.nh.us/supreme. a.m. on the morning of their release. The direct address of the court's home reporter@courts.state.nh.us. Opinions are available on the Internet by 9:00 to press. Errors may be reported by E-mail at the following address: editorial errors in order that corrections may be made before the opinion goes Hampshire, One Charles Doe Drive, Concord, New Hampshire 03301, of any Readers are requested to notify the Reporter, Supreme Court of New well as formal revision before publication in the New Hampshire Reports. NOTICE: This opinion is subject to motions for rehearing under Rule 22 as from Sullivan’s file to demonstrate prejudice from being denied access to the p. 2 a proposed decision allowing McGann to supplement the record with items Sullivan’s work file for McGann to review. The hearing officer thereafter issued referred the appeal to a hearing officer, who ordered the SAU to produce denied a meaningful opportunity to cross-examine him. The State Board she was denied the opportunity to review Sullivan’s work file and was thus SAU Board had violated her right to due process. In addition, she argued that McGann appealed to the State Board of Education, asserting that the

SAU Board voted to terminate McGann. renewed her request for access to Sullivan’s file. Following the hearing, the Sullivan’s work file. On the second day of the hearing, McGann unsuccessfully “to engage in discovery orders” and declined to order the SAU to produce facilitate the hearing ruled that it was not within the province of the SAU Board testimony had conformed to these representations. The moderator hired to McGann of exactly what Sullivan would testify about and that his direct have anything to turn over. The SAU further responded that it had informed SAU responded that it had never seen a file from Sullivan and thus did not Following direct examination, McGann requested access to Sullivan’s file. The auditor, John Sullivan, whom it had hired to review its financial records. During the evidentiary portion of the hearing, the SAU called a forensic

other party’s witnesses. were permitted to call witnesses, present evidence, and cross-examine the portion and an additional evening for deliberation. Both McGann and the SAU before the SAU Board, which was held over three evenings for the evidentiary about accounting records and systems. McGann requested a public hearing with an auditing company’s management letter that raised significant concerns federal grants were followed, and intentionally failed to provide the SAU Board request for them, failed to ensure that “time and effort” requirements for the circumvented the SAU Board by granting the raises after it had denied her 2 grant money in the form of stipend contracts to give raises to her staff, The gist of the allegations was that McGann improperly used federal

investigation. additional grounds for termination that had been uncovered during the SAU’s before the SAU Board. On October 9, 2008, the SAU notified McGann of three basis for her termination and informed her of her right to request a hearing intention to terminate her employment. The letter identified eight issues as the 30, 2009. On September 3, 2008, the SAU Board notified McGann of its employment contract with the SAU for the term of July 1, 2007, through June

serve as interim superintendent. She subsequently entered into an resignation of the former superintendent, McGann was selected by the SAU to The record supports the following facts. In 2004, following the

p. 3 apply: . . . [d]uring the hearing, the school board shall allow a party, or a opportunity for a hearing if requested at which the following procedures shall Rule 204.01(b)(4) provides that “[t]he local board shall provide an face.” Doe v. N.H. Dep’t of Safety mere expedient of interpreting a rule that is clear and unambiguous on its “We will not permit an agency to add or delete requirements through the

System,” see School Board Level to Resolve Disputes Between Individuals and the School actions by local school boards. It differentiates between “Proceedings at the Part 204 of the rules provides procedural requirements for certain 3

McGann with a “meaningful right to cross-examine” the expert witness. required the SAU to provide access to Sullivan’s work file in order to provide Admin. Rules, Ed 204.01(b)(4). The State Board determined that this rule

case. involve a teacher nonrenewal, only the procedures in Rule 204.01 apply to this State Board’s order refers to Rule 204.02, because these proceedings did not Teacher Nonrenewal,” see N.H. Admin. Rules, Ed 204.02. Even though the

N.H. Admin. Rules, Ed 204.01, and “Hearing Procedure For

We review the interpretation of administrative rules de

(quotation omitted). regulation and with the purpose which the regulation is intended to serve.” Id. interpretation to determine if it is consistent with the language of the its regulations, that deference is not total. We still must examine the agency’s in segments. Id. “While deference is accorded to an agency’s interpretation of words used.” Id. (quotation omitted). We consider the rule as a whole, and not statutes, where possible, we ascribe the plain and ordinary meaning to the Murdock, 156 N.H. 732, 735 (2008). “In construing rules, as in construing

hearing, the State Board found that the prejudice was “obvious.” determining that the failure to turn over Sullivan’s work file required a new rules, particularly New Hampshire Administrative Rules, Ed 204.01(b)(4). In expert’s file prior to the hearing before the SAU Board, the SAU violated its The State Board determined that by not turning over documents from the We begin with the SAU’s challenge to the State Board’s discovery ruling.

adopted it in its entirety. This appeal and cross-appeal followed. hearing. Both parties objected to the proposed decision, but the State Board that the State Board vacate and remand the SAU Board’s decision for a new file. The decision rejected McGann’s remaining arguments and recommended administrative rules required the SAU to provide McGann with Sullivan’s work file. The proposed decision ruled that the State Board of Education’s and in her reputation. p. 4 we assume that McGann has a protected interest in her continued employment reputation as an educator and administrator. For the purpose of this appeal, a property interest in her continued employment and a liberty interest in her McGann argues that two legally protected interests are implicated here –

Town of Bethlehem, 154 N.H. at 328.

We then determine whether the procedures provided afford adequate See been implicated. Id.; see also Mathews v. Eldridge, 424 U.S. 319, 332 (1976). claims under the State Constitution, citing federal opinions for guidance only. 314, 328 (2006). Initially, we ascertain whether a legally protected interest has “opportunity to cure” prior to her termination. We first address McGann’s typically employ a two-prong analysis. Appeal of Town of Bethlehem, 154 N.H. whether particular procedures satisfy the requirements of due process, we the SAU Board relied upon facts not in the record; and (4) she was not given an provide access to Sullivan’s file prior to the termination hearing. To determine substantially different from the grounds of which she had been given notice; (3) We begin with McGann’s argument that due process required the SAU to (2) the SAU Board terminated her based upon adverse findings that were because: (1) she was not provided with pre-hearing discovery of Sullivan’s file; that her federal and state constitutional rights to due process were violated A We next turn to McGann’s arguments on cross-appeal. McGann argues 360, 155 N.H. 93, 95 (2007) (quotation omitted). the due process requirements of the State Constitution.” In re Father 2006- III State v. Ball, 124 N.H. 226, 233 (1983). “This court is the final arbiter of

its expert’s file. that pursuant to Rule 204.01(b)(4) the SAU was required to provide access to at 477 (quotation and brackets omitted), we reverse the State Board’s ruling of interpreting a rule that is clear and unambiguous on its face,” Doe, 160 N.H. Because an agency may not “add . . . requirements through the mere expedient SAU to provide discovery to a party prior to an administrative hearing. nothing in the administrative rules authorized the State Board to require the Sullivan’s file would have allowed for a more “meaningful” cross-examination, expert witness. While the State Board may have believed that access to shows that at the hearing, McGann extensively cross-examined the SAU’s allow a party or a representative to examine any and all witnesses. The record brackets, and ellipsis omitted). Here, the rule requires that the school board reputation is minimal. See p. 5 the risk of an erroneous deprivation of her right to continued employment and substantial, given the elaborate process provided to her prior to termination,

State v. Veale

Even assuming that McGann’s private interests in this case are

“[e]stablish an adequate record in all contested cases”; and “[i]ssue timely procedural requirement would entail. of such a hearing”; “[c]onduct a hearing in a manner assuring due process”; available to him, there was a low risk of an erroneous deprivation). Under the fiscal and administrative burdens that the additional or substitute the legal rights, duties or privileges of a party are threatened”; “[p]rovide notice (Utah 2010) (where petitioner made use of extensive grievance procedures number of steps. The board must “[p]rovide an opportunity for a hearing when McBride v. Utah State Bar, 242 P.3d 769, 777 that resolve disputes between individuals and the school system require a Education’s administrative rules. At the local school board level, proceedings We briefly review the process afforded McGann under the State Board of

written decision. Id. 204.01(g). final decision of the board to the state board within thirty days of receipt of the the board’s decision. Id. 204.01(e). Finally, a party has the right to appeal a description of the issue in dispute, the board’s decision, and the rationale for appealed to the state board. Id. 204.01(d). The decision must include a quorum of the board, which must include notice that the decision may be Government’s interest, including the function involved and the the law. Id additional or substitute procedural safeguards; and finally, the. 204.01(c). The board must issue a written decision arrived at by a Know law, including compliance with all the record-keeping requirements of through the procedures used, and the probable value, if any, of a statement that it has complied with all of the requirements of the Right-to- “examine any and all witnesses.” Id. 204.01(b)(3)-(4). The board must include during the hearing, the party, or a party’s representative, must be allowed to or nonpublic consistent with the provisions of the [Right-to-Know law]”; and formal rules of evidence are not applicable; the hearing must be either “public

second, p. 5 the risk of an erroneous deprivation of such interest First, the private interest that will be affected by the official action;

S. Ct. 748 (2009).

, 158 N.H. 632, 639 (quotation omitted), cert. denied, 130

due process analysis requires a balancing of three factors: Duffley v. N.H. Interschol. Ath. Assoc., Inc., 122 N.H. 484, 493 (1982). Our correctly determined, and that its decision was otherwise reasonable. See that the facts upon which the SAU Board relied in terminating McGann were case, the principal reason for requiring procedural due process is to ensure Our next task is to decide what process was due. In the context of this asserts that despite Sullivan’s testimony that he interviewed Tappan and spoke p. 6 determine which documents were not in the file prejudiced her case. She McGann also argues that her inability to examine Sullivan’s file to

access to the memo during the cross-examination of Tappan. testimony of Tappan, we find no prejudice resulting from McGann’s lack of includes only a passing reference to Tappan. After reviewing the memo and the argument centers almost entirely on the cross-examination of Sullivan and memo would have afforded her a more effective cross-examination. Indeed, her As for her cross-examination of Tappan, McGann fails to show how the

would have afforded her a more effective cross-examination. about which Sullivan testified and McGann has failed to show how the memo memo. Nothing in the memo prepared by Tappan relates to the stipend funds Sullivan, we find no prejudice to McGann due to her lack of access to the effectively cross-examine Sullivan and Tappan. With regard to cross-examining administrator. McGann argues that the memo would have allowed her to more unsigned memorandum prepared by William Tappan, the SAU’s business

McGann also alleges prejudice because she did not have access to an

cross-examination. Cf own notes. Due process, however, does not require the opportunity for perfect that this contradiction was weaker than direct impeachment with Sullivan’s who disputed Sullivan’s testimony regarding the stipends. McGann argues However, McGann presented testimony from one such employee, Ann Wright, payment for performing extra work, rather than “bonuses” as Sullivan testified. that indicated some of the SAU employees considered their stipends to be McGann argues that access to Sullivan’s file would have revealed notes

to these interview notes. omitted)). Wright’s testimony minimized any prejudice caused by lack of access process seeks to assure a defendant a fair trial, not a perfect one.” (quotation

brief fails to demonstrate any prejudice to McGann’s case. due to the lack of discovery was “obvious,” a review of the record and McGann’s decision adopted by the State Board found that the prejudice to McGann’s case decision to the State Board of Education and then to this court. While the Following the decision of the board, McGann had the right to appeal the the termination decision, had to be determined by a quorum of the SAU Board. also permitted to cross-examine all witnesses. All findings of fact, as well as counsel, call witnesses, and present evidence to answer the charges. She was charge. She was given a full public hearing at which she was permitted to have charges against her as well as a description of the evidence supporting each 2010); N.H. Admin. Rules, Ed 204.01(c). McGann was given notice of the had complied with all aspects of that law. See RSA ch. 91-A (2001 & Supp. SAU Board and the administrative rules required the Board to certify that it Right-to-Know law, McGann was permitted access to all public records of the administrative hearings, see

p. 7 government has a strong interest in the integrity and accuracy of As for the third prong of the due process analysis, we recognize that the

first be notified.” Petition of Kilton are entitled to be heard; and in order that they may enjoy that right they must procedural due process has been clear: Parties whose rights are to be affected 7 pre-hearing notices. “For more than a century, the central meaning of findings that substantially differed from the grounds for termination stated in process, however, does not require perfect notice, but only notice reasonably SAU Board voted to terminate her employment based upon four adverse McGann next argues that her due process rights were violated when the more than a mere gesture.” Id. (quotations and brackets omitted). “Due of such nature as reasonably to convey the required information and must be ‘hearing.’” Id. (quotation omitted). “To satisfy due process, the notice must be the affected individual of, and permit adequate preparation for, an impending omitted). “The purpose of notice under the Due Process Clause is to apprise

opportunity to meaningfully cross-examine Sullivan. witness could be examined. We find that McGann had an extensive limit McGann in either the length of the examination or the topics on which the Sullivan was twice as long as the direct examination. The SAU Board did not to cross-examine all witnesses at length, and, in fact, the cross-examination of generally. The record does not support this argument. McGann was permitted B resulted in a lack of an opportunity to conduct a meaningful cross-examination procedures are quite different from those binding judicial procedures). N.H. 42, 46 (1993) (due process requirements binding administrative process that was due at her termination hearing. Cf. Petition of Grimm, 138 After a thorough review of the record, we find that McGann received all the required the SAU to provide McGann with pre-hearing access to Sullivan’s file. additional procedural safeguard is minimal, we cannot say that due process provided with extensive procedural protections, and the value of the requested producing the file is minimal. Nonetheless, where, as here, a party has been government’s interest in withholding the expert’s file is low, and the burden of judicial proceedings), aff’d by an equally divided court, 484 U.S. 1 (1987), the (D.C. Cir. 1986) (describing government interest in preserving fairness in Finally, McGann argues that the lack of access to the documents Abourezk v. Reagan, 785 F.2d 1043, 1060-61

minimal at best and did not prejudice McGann’s case before the SAU Board. before the hearing, any impeachment value in the lack of interview notes was regarding the stipend funds. Even if McGann had had access to his work file included only passing references to these interviews, unrelated to his testimony notes or records of any such communications. However, Sullivan’s testimony extensively with the SAU’s regular auditing firm, the work file contained no p. 8 Board. The notice further informed McGann that she was alleged to have used an SAU policy that requires any salary increase to be approved by the SAU her staff members after the board had refused to grant them. Policy GBDA is she had circumvented the board and used federal grant money to give raises to The notice provided to McGann clearly informed her of the allegation that

federal investigation and/or prosecution. These failures to comply with federal law may subject the SAU to payment for a pay period during which the employee did not work.

at least one example of where an employee received a stipend their normal work day. The independent auditors have uncovered grant projects and who are apparently doing grant work during with grant money who are not documenting their time spent on the numerous instances of SAU employees receiving stipends paid for

documentation.” The independent auditors have uncovered will be supported by personnel activity reports or equivalent activities or cost objectives, a distribution of their salaries or wages Under OMB Circular A-87, “[w]here employees work on multiple

achieved these “raises” through the use of stipend contracts.

refused to grant the raises she requested for her staff. She

give so-called “raises” to her staff members after the SAU Board

Ms. McGann inappropriately used federal grant money to

requirements for federal grants imposed by federal law. c. Under her supervision, the SAU ignored the time and effort

reason for termination: In the October 9, 2008 letter to McGann, the SAU identified the following

contravention of Policy GDBA.” stipends from federal grant money . . . occurred without Board approval in The sixth adverse finding was that “Ms. McGann’s payment of certain staff Board of stipends being paid to various staff in the SAU and school districts.” and School Districts and breached that duty when she failed to inform the duty to inform the Board of the stipends being paid to various staff in the SAU disclosed. The SAU Board’s fifth adverse finding was that “Ms. McGann had a

address the adverse findings that McGann argues were not previously materially changed from the notice she received prior to the hearing. We first previously been disclosed to her and that two other adverse findings were McGann contends that two of the SAU Board’s adverse findings had not

circumstances of each case.” Id. at 639 (quotation omitted). upon whether notice was fair and reasonable under the particular facts and objections.” Id. at 638-39 (quotation omitted). “Thus, our inquiry focuses pendency of the action and afford them an opportunity to present their calculated, under all the circumstances, to apprise interested parties of the adequate and did not violate McGann’s due process rights. p. 9 federal law. The notice provided in the October 9, 2008 letter was more than expected her to comply with the time and effort requirements as required by during the normal work day. McGann was certainly aware that the SAU Board without documenting their time spent on grant projects and doing grant work that the SAU Board uncovered instances of employees receiving stipends grants imposed by federal law.” The notice provided to McGann informed her supervision, the SAU ignored the time and effort requirements for federal noted above, the October 9, 2008 letter notified McGann that “[u]nder her paid to staff members for federal grant work, and failed in that duty.” As we responsible for ensuring that ‘Time and Effort’ reports justified the stipends The SAU Board’s seventh adverse finding was that, “Ms. McGann was

dated December 20, 2007 and duty to cause the final Report on Internal Control over Financial Reporting hearing. The SAU Board’s first adverse finding was that, “Ms. McGann had a materially from those contained in the notice provided prior to the termination We next address the two adverse findings that McGann asserts differed

defense at the termination hearing. of the charges against her in sufficient detail to permit preparation of her therein. The notice provided in the September 3, 2008 letter advised McGann letter to the school board and disclose to the Board the information contained the Board’s determination that McGann failed to both provide the auditing issues identified in the letter. The SAU Board’s first adverse finding reflected management letter to the Northwood School District nor advised the Board of informed McGann that she neither provided the auditing company’s notice letter to the word “and” in the adverse finding. The notice letter the letter.” McGann makes much of the change from the word “or” in the to the Northwood School District or to advise the Board of issues identified in based upon her “failure to provide [its] auditing company’s management letter September 3, 2008 notice, the SAU informed McGann that her termination was withheld the final Report from the Northwood School District’s Board.” In the disclosed to the Northwood Board and breached that duty when she wrongfully

hearing. and receive approval from the SAU Board would be an issue at her termination McGann cannot credibly assert that she was unaware that her duty to inform October 9, 2008 letter, due process does not require perfect notice, and language of the adverse findings is not identical to the notice provided in the inform the Board and did not obtain Board approval of the raises. While the findings five and six; to wit, that by circumventing the SAU Board, she failed to conduct is the same conduct that is the subject of the SAU Board’s adverse stipend contracts to give raises to her staff without SAU Board approval. This we reach the same result under the Federal Constitution. See p. 10 than does the State Constitution with regard to McGann’s due process claims, Because the Federal Constitution does not provide any greater protection

at 645.

an employment contract. discrepancies in factual statements. See due process requires prior notice and an opportunity to cure before terminating minutes and the hearing transcript in an attempt to uncover any such requirement in the context of employment contracts, we decline to hold that the record and we decline the invitation to review the deliberative session and absent citation of any authority supporting such a constitutional instances of SAU Board members making factual statements not supported by “unsatisfactory work”). Absent a specific provision in the employment contract, the SAU Board’s deliberative session. McGann does not cite any specific termination. She relies upon Barrows v. Boles prior notice and an opportunity to cure if the employee was terminated for support of this claim, McGann cites generally two portions of the minutes of failing to provide her with “an opportunity to cure” the alleged grounds for her 265-66 (7th Cir. 1997) (employment agreement provided a requirement for veracity of these facts constitutes a violation of her due process rights. In Finally, McGann argues that the SAU violated her due process rights by requirement in their contracts, see Kaniff v. Allstate Ins. Co., 121 F.3d 258, McGann argues that the lack of notice and opportunity to be heard on the Employees are free to bargain for a prior notice and opportunity to cure statements were to facts not established on the record before the SAU Board.” transactions, not employment contracts. See D RSA 382-A:1-103 (Supp. 2010). Code, see RSA 382-A:2-605(1)(a) (Supp. 2010), applies to commercial (quotations omitted). This statement, drawn from the Uniform Commercial opportunity to cure any significant objections before being held liable.” Id. “[f]air dealing may include giving the opposing party fair notice and an of the parties will deal in good faith and deal fairly with the other,” and that the proposition that “every agreement contains an implied covenant that each

based on their personal recollection of specific events; some of these session, several SAU Board members made factual statements apparently 146 N.H. 342, 347 (2001). facts.” McGann asserts that “[d]uring the December 2, 2009 deliberative In the Matter of Thayer and Thayer, due process rights were violated by “the SAU Board’s reliance on extra-record McGann next argues that the board erred when it failed to find that her

Affirmed in part; reversed in

DALIANIS, C.J.