Kentucky Commission on Human Rights v. Fraser , 1981 Ky. LEXIS 311 ( 1981 )

OPINION OF THE COURT

This case concerns the constitutionality of KRS 344.230(3)(h), which authorizes the Kentucky Commission on Human Rights to award compensatory damages' for embarrassment and humiliation caused by unlawful discrimination.

The movant, Donna Cooper, was hired as a food service worker in the respondent Fraser’s restaurant in January of 1976. Shortly thereafter she learned that she was pregnant. In February of that year she was fired. In June of 1976 she filed a complaint with the Kentucky Commission on Human Rights alleging that she was terminated because of her pregnancy, and therefore her sex, in violation of KRS 344.-040. A hearing was conducted in November of 1976, at which the evidence established that Mrs. Cooper was terminated because of her pregnancy. The evidence also indicated that Fraser, the respondent, offered leaves of absence to other employees with temporary disabilities, rather than terminating them.

In January of 1977 the Commission found that the respondent had violated KRS 344.-040 and ordered him to pay $1,000 in damages to Mrs. Cooper for humiliation and embarrassment pursuant to KRS 344.-230(3)(h).

Respondent appealed, as provided by the statute, to the Madison Circuit Court, which reversed the Commission’s decision. The Court of Appeals affirmed, and adopted the circuit court opinion in its entirety. We granted discretionary review.

The statute in question is part of the Kentucky Civil Rights Act, KRS Chapter 344, which provides a detailed procedure for the consideration of discrimination complaints. KRS 344.200, et seq. Written complaints of alleged discrimination are investigated by the staff of the Commission on Human Rights, after which, if “probable cause” is found, resolution is sought through conference and conciliation. If no agreement is reached, the Commission conducts a full hearing pursuant to KRS 344.-210, .220 and .230. If the Commission finds that a violation has occurred, it may impose any of several sanctions, including cease and desist orders, reinstatement of employees, admission of employees to training programs, rental of property to an individual, and payment of damages to an individual. It is this last provision for the award of damages which is challenged here. The statute provides that any party aggrieved by the Commission’s action may seek judicial review in circuit court where awards of damages may be modified or set aside. Further review is available in the Court of Appeals. KRS 344.240.

Four issues are raised on this appeal: (1) Whether KRS 344.230(3)(h) allowing the Commission to award compensatory damages for embarrassment and humiliation in discrimination eases unconstitutionally denies the right to trial by jury; (2) Whether the statute is an unconstitutional usurpation of judicial power; (3) Whether the Court of Appeals improperly imposed “preponderance of the evidence” as the standard for review of the Commission’s findings, and, (4) Whether the evidence in this case is sufficient to support the Commission’s findings. We will discuss them in that order.

I

TRIAL BY JURY

The Court of Appeals held that the statute violates the seventh amendment to the United States Constitution and Section 7 of the Kentucky Constitution, both of which provide that the right of trial by jury shall be preserved inviolate.

The United States Supreme Court has interpreted the right to trial by jury to mean the right which existed in suits under the common law in 1791, when the amendment was adopted. Neither the seventh amendment nor Section 7 of the Kentucky Constitution creates a jury trial right. Both, by their terms, simply preserve that right as it already existed under the common law. Atlas Roofing Co., Inc. v. Occupational Safety, Etc., 430 U.S. 442, 97 S.Ct. 1261, 51 L.Ed.2d 464 (1977); NLRB v. Jones & Laughlin Steel Corp., 301 U.S. 1, 57 S.Ct. 615, 81 L.Ed. 893 (1937). Because the right to be free from discrimination based on race, color, religion, national origin, sex, and age is a creature of statute and not a common-law tort, it does not fall within the scope of the right to trial by jury preserved by the seventh amendment and by Section 7 of the Kentucky Constitution. Atlas, NLRB v. Jones and Laughlin, supra. The statute which creates a right can prescribe a proceeding for adjudication of that right in an administrative forum without a jury trial. Curtis v. Loether, 415 U.S. 189, 94 S.Ct. 1005, 39 L.Ed.2d 260 (1974). The applicability of the seventh amendment depends on the nature of the right and the nature of the forum; where a right is created by statute and committed to an administrative forum, jury trial is not required. Atlas, supra, Curtis, supra, Pernell v. Southall Realty, 416 U.S. 363, 94 S.Ct. 1723, 40 L.Ed.2d 198 (1974). Kentucky has adopted a similar rule. Thomas Forman Co. v. Owsley County Board of Supervisors, 267 Ky. 224, 101 S.W.2d 939 (1937); Stearns Coal & Lumber Co. v. Commonwealth, 167 Ky. 51, 179 S.W. 1080 (1915). For these reasons we hold that KRS 344.230(3)(h) does not unconstitutionally deprive the respondent Fraser of his right to a jury trial.

II.

USURPATION OF JUDICIAL POWER

The Court of Appeals found that the Commission’s assessment of damages for humiliation and embarrassment was unconstitutional for lack of a measurable standard by which to guide the Commission’s deliberations. The same issue is raised in the companion case of Kentucky Commission on Human Rights and Clay v. Barbour, 625 S.W.2d 860 (Ky.1981), also decided today. Movant argues that the grant of authority to the Commission to assess such damages is not an unconstitutional delegation or usurpation of judicial powers. We agree.

The general test for delegation of powers to an administrative agency in Kentucky is that of safeguards, procedural and otherwise, which prevent an abuse of discretion by the agency. Butler v. United Cerebral Palsy of Northern Kentucky, 352 S.W.2d 203 (1961). In the present case, we find sufficient safeguards (1) in the presence of agency regulations, 104 KAR 1:010 et seq., (2) the provision for a full due-process hearing, KRS 344.200 et seq. and 104 KAR 1:020, (3) the agency’s experience in making similar determinations, and (4) the provision for judicial review, KRS 344.240, to uphold the statute.

In so holding we are not unmindful of the tension between judicial review as a primary safeguard against abuse of discretion, and the fact that the statutory standard of review, that of a “clearly erroneous” finding, KRS 344.240(2), narrows the scope of review. Suffice it to say that courts are not required by the “clearly erroneous” standard to uphold arbitrarily high or factually unfounded assessments of damages for humiliation and embarrassment.

The mere fact that the Commission is involved in adjudication does not in itself render the statute unconstitutional as a usurpation of judicial power. Administrative agencies are frequently involved in the adjudication of disputes (Worker’s Compensation, Unemployment Compensation, reparations proceedings before the Interstate Commerce Commission, and the like). See, Atlas, supra, NLRB v. Jones & Laughlin, supra. Where the statute adequately defines the prohibited conduct, administrative bodies may ascertain the facts and administer the law. Kentucky Alcoholic Beverage Control Bd. v. Jacobs, 269 S.W.2d 189 (Ky.1954). Such acts of administrative bodies are not an unconstitutional usurpation of judicial power where judicial review is available, Keller v. Kentucky Alcoholic Beverage Control Bd., 279 Ky. 272, 130 S.W.2d 821 (1939). The combination of statutory guidelines as to prohibited conduct, availability of a due process hearing, and provisions for judicial review serve to circumscribe the agency’s area of discretion within constitutional limits. In Kentucky and elsewhere, this authority of administrative bodies extends to the determination of liabilities between individuals in cases such as Wells Elkhorn Coal Co. v. Vanhoose, 220 Ky. 381, 295 S.W. 464 (1927), a worker’s compensation case. The substantial trend of authority extends administrative powers of adjudication to encompass the award of damages. Jackson v. Concord Co., 54 N.J. 113, 253 A.2d 793 (1969); State Human Rights Commission v. Pauley, W.Va., 212 S.E.2d 77 (1975). We find nothing unconstitutional in the administrative award of damages under this statute where due process procedural rights have been protected, where prohibited conduct has been well defined by the governing statute, and where judicial review is available.

Having found that a jury trial is not required for administrative adjudications under the Kentucky Civil Rights Act, that the statutory scheme is not unconstitutional for lack of “safeguards” against abuse of discretion by the Commission, and that the administrative adjudication of disputes, including the power to award damages, is not an unconstitutional usurpation of judicial powers, we conclude that no specific monetary ceiling for the award of damages for humiliation and embarrassment is constitutionally required. Once the Commission’s function as factfinder in a due process hearing has been upheld, there is no reason why the Commission should be held to a specified dollar limit while a jury deciding the same case would not be similarly limited. There is a possibility of arbitrary decision-making by the Commission, but the same possibility exists in a jury trial, and judicial review is available to modify or set aside an excessive award.

Humiliation and embarrassment are, by their nature, not easily quantified, yet juries have historically been entrusted with assessing similarly intangible elements of injury, such as pain and suffering and loss of consortium, without dollar limits. As long as judicial review is available there is no inherent evil in committing the same fact-finding function to an administrative body. In such cases a specific limit could itself be arbitrary, and the agency’s experience in gauging similar cases gives it a range of reasonable awards which may help to make the agency less susceptible to an unreasonable finding than an inexperienced jury might be.

Humiliation and embarrassment lie at the core of the evil which the Kentucky Civil Rights Act was designed to eradicate. If victims are to be fairly compensated for these injuries, the factfinder must be free to assess reasonable damages as a jury would, provided that there is sufficient evidence to support the finding. For these reasons we hold that the statute is not an unconstitutional usurpation of judicial power.

III.

THE STANDARD OF REVIEW

KRS 344.240(2) provides in pertinent part:

“the findings of fact of the commission shall be conclusive unless clearly erroneous in view of the probative and substantial evidence on the whole record.”

The Court of Appeals interpreted this standard of review to mean that the Commission’s findings must be supported by a preponderance of the evidence. This is clearly wrong. The rule in Kentucky is that if there is substantial evidence in the record to support an agency’s findings, the findings will be upheld, even though there may be conflicting evidence in the record. Taylor v. Coblin, Ky., 491 S.W.2d 78 (1970); Reeves v. Jefferson County, Ky., 245 S.W.2d 606 (1951). The agency’s findings are clearly erroneous if arbitrary or unsupported by substantial evidence in the record. The “clearly erroneous” standard narrows the scope of review, yet it is not without teeth. The Commission has not been granted an unbridled discretion, and courts on review are not required to uphold arbitrary or unreasonable awards of damages.

IV.

SUFFICIENCY OF THE EVIDENCE

The Commission awarded $1,000 damages to the movant for humiliation and embarrassment caused by discrimination against her. The record shows substantial evidence of discrimination against Mrs. Cooper on the basis of pregnancy. While civil penalties may be assessed by administrative bodies, Atlas Roofing, supra, the statute in question here, KRS 344.230(3)(h), provides for compensatory, not punitive damages. Therefore evidence of discrimination alone is not the standard by which to evaluate damages: there must be evidence of actual humiliation and embarrassment. On that issue the record shows that Mrs. Cooper was not embarrassed or humiliated by the fact of the pregnancy itself, (TR. at 67), but she was angered and hurt when she was terminated as a result, (TR. at 38). We find the evidence sufficient to support the Commission’s finding.

For the foregoing reasons we hold that the statute KRS 344.230(3)(h), is constitutional and that the assessment of damages is supported by the evidence in this case.

The decision of the Court of Appeals is reversed, and the case is remanded to the Circuit Court with instructions to enter a judgment in conformity with this opinion.

PALMORE, C. J., and CLAYTON, AKER and STEPHENS, JJ., concur. STEPHENSON and STERNBERG, JJ., dissent and file separate opinions.