Despite reliance on hearsay evidence, city officials may dismiss an employee whose conduct undermined the municipal scrap metal disposal and recycling program, according to a ruling by a Minnesota appeals court.

Paul Jerdee had worked for the city of Albert Lea, Minn., for 28 years — most recently as head of the Street Department — when his tenure came to an end. His situation began to fall apart after the city launched an investigation of its scrap metal handling procedures. Although the probe uncovered no mishandling of the scrap metal itself, the city encountered considerable grumbling by its workers about Jerdee's behavior.

City Manager Victoria Simonsen and Public Works Director Steven Jahnke met with Jerdee to discuss these complaints, but they did not identify his accusers. Summarized in writing, the accusations were placed into Jerdee's personnel file in May 2005. Simonsen and Jahnke termed the behavior “unacceptable and very destructive” to department morale. They directed Jerdee, among other things, to attend a management training program and get written permission from Jahnke for purchasing and other dealings with vendors. The city then began hauling scrap metal on its own.

In June 2005, Simonsen and Jahnke met again with Jerdee — this time to discuss his purchasing practices, which, according to their post-meeting memo to him, were “misleading” and “border[ed] on falsification of financial records.” Indeed, they accused him of a “lack of candor” during the earlier investigation. The memo instructed him to act professionally, follow proper financial procedures, and “consider public image and necessity in every purchase.” Jerdee signed the memo, which was plainly labeled a written warning, and it was placed in his personnel file.

Two months later, a city employee reported that when he brought scrap metal to the nearby Clarks Grove, Minn., recycling facility, he was asked, “Do you want us to not give you any money for the scrap metal like the Street Department asked us to?” When Jahnke talked with the facility owner, he learned that Jerdee had directed the owner to pay “as little as you can” for scrap so that Jerdee could later claim that it was not cost-effective for the city to haul its own material.

Not surprisingly, city officials launched yet another investigation. The notes from a meeting between Simonsen, Jahnke and Jerdee regarding the incident reveal that, as Jerdee saw it, the conversation with the owner was simply pursuing the “best interest of the city.” The city, however, saw things differently.

Simonsen terminated Jerdee's employment in a letter that referred to the Clarks Grove incident along with “other issues we have discussed.” Jerdee responded by requesting a post-termination hearing under the city personnel code. After testimony from the city and Jerdee, the hearing officer upheld the dismissal, finding that the written warning and evidence of the recycling facility incident met the just-cause standard.

Affirming the hearing officer's decision, a state appeals court determined that, even with the hearsay evidence, the record provided a “legal and substantial basis for the action taken.” The court noted that Jerdee had an opportunity in a meeting with city officials to explain his actions regarding the recycling facility.

[Jerdee v. City of Albert Lea, No. A08-0050, Minn. App., Jan. 13, 2009.]

The legal editor welcomes comments from readers. Contact Barry Shanoff via e-mail: [email protected].

BARRY SHANOFF is a Rockville, Md., attorney and general counsel of the Solid Waste Association of North America.