Opinion
NO. 2016-CA-001431-MR
01-12-2018
FAYETTE COUNTY ATTORNEY LARRY S. ROBERTS APPELLANT v. KENTUCKY UNEMPLOYMENT INSURANCE COMMISSION and ROCHELLE PALMER APPELLEES
BRIEF FOR APPELLANT: Larry Roberts Fayette County Attorney Steven P. Stadler Richard E. Vimont Assistant Fayette County Attorneys Lexington, Kentucky BRIEF FOR APPELLEES: KENTUCKY UNEMPLOYMENT INSURANCE COMMISSON: Patrick B. Shirley Frankfort, Kentucky
NOT TO BE PUBLISHED APPEAL FROM FAYETTE CIRCUIT COURT
HONORABLE PAMELA R. GOODWINE, JUDGE
ACTION NO. 16-CI-00585 OPINION
AFFIRMING
** ** ** ** **
BEFORE: COMBS, J. LAMBERT AND NICKELL, JUDGES. COMBS, JUDGE: Appellant, Larry S. Roberts, Fayette County Attorney (FCA), appeals from an Opinion and Order of the Fayette Circuit Court which affirmed a decision of the Appellee, the Kentucky Unemployment Insurance Commission (KUIC). After our review, we affirm.
Appellee, Rochelle Palmer, was employed by FCA as a Traffic Court Division Coordinator from July 26, 2010, until she was discharged on August 24, 2015. She filed for unemployment insurance benefits, which were granted. FCA appealed that initial determination in Palmer's favor. Following a hearing on November 2 and 24, 2015, the appeals referee affirmed. FCA then appealed to KUIC, which affirmed by Order of January 28, 2016. In relevant part, KUIC found as follows:
The claimant was discharged ... after Larry Roberts, Fayette County Attorney, had received "numerous complaints" that the claimant had not timely responded to inquiries of the public or had caused a delay in a citizen's diversion process, resulting in additional work for court personnel and/or adverse legal consequences to citizens.
...
The employer's standard of conduct policy requires all employees to act as public servants who "treat citizens with courtesy and respect." The employer's policy also prohibits employees from committing any act that could adversely affect a member of the public.
KUIC made additional findings regarding events preceding Palmer's discharge, which we shall summarize as relevant to the case before us.
In June 2015, the office telephones did not work and citizens could not contact or be contacted by telephone. Palmer's workload increased after a co-worker left and the majority of his job duties were transferred to her. Larry Roberts received numerous complaints from citizens that their court dates were not continued properly and that Palmer failed to return phone calls or respond to letters. Roberts had alerted Palmer about those complaints many times. The Assistant County Attorney, Lee Turpin, also received complaints about Palmer's continuing of cases and alerted her about it. Palmer explained that she "continued cases because she had not received paperwork from or had not heard back from the citizens who were a part of the diversion program." A program participant whose court date was not continued properly became upset and went to the FCA's office; Palmer believed that the participant had failed to turn in paperwork. Larry Roberts felt that Palmer's attendance affected her performance and that "[s]he had used 'sick leave' on various occasions. However, she had not been warned her attendance was unsatisfactory, and she was never subject to reporting her time on a time clock." Further, Palmer "had not received any evaluations of her work, nor had she received written warnings or formal discipline for any reason."
After discussing the applicable law, KUIC outlined the reasons for its decision in her favor:
Before a disqualification may be imposed, the employer must prove the alleged misconduct by a preponderance of credible evidence. In this case, the employer clearly stated that the reason for the claimant's discharge was her unsatisfactory work performance in processing program participants through the diversion program. Ancillary issues, such as the claimant's time sheet submissions and "abuse" of sick time, were not sufficiently developed on the record or shown to be direct causes of her discharge; thus such shall not be considered herein.
The employer's rule prohibiting any act adversely affecting a member of the public and requiring "courtesy and respect" could be applied to require or prohibit limitless types of behavior. If considered a 'rule' [sic] for purposes of statutory application, it would be vague and overly broad. ...
Failure to render the desired level of care to citizens is not behavior covered by a specific example contained in KRS 341.370(6). Thus, this allegation is aptly adjudicated under Boynton Cab which encompasses the broad standard of general duty a worker owes to his employer. Under the common law definition, misconduct denotes workers [sic] behavior that shows a willful or wanton disregard of the employer's interests. Such is shown by a deliberate disregard of the standard of behavior which the employer has the right to expect, negligence of such degree or frequency as to manifest culpability, or intentional disregard of duties/obligations owed to the employer.
As to the complaints by unnamed citizens and employees about the claimant's poor work performance, in an attempt to meet its burden, the employer offered the testimony of Larry Roberts, Fayette County Attorney, and Lee Turpin, Assistant County Attorney. Their testimony was based solely upon reports received from unnamed complainants who did not testify at the referee hearing, and the testimony offered by the employer is hearsay. The evidence offered by the employer is based upon hearsay statements from non-appearing witnesses who were not subject to cross-examination. This evidence was entered into the record at the referee hearing and has been given the weight and consideration it is due. However, the straightforward, direct sworn testimony of the claimant, subject to cross-examination, is assigned greater weight because it is found to be the more credible, and the only legally competent, evidence presented as to the claimant's behavior.
In Douthitt v. Kentucky Unemployment Insurance Commission, 676 S.W.2d 472 (Ky. App. 1984), the court adopted the definition of misconduct in Boynton Cab Company v. Neubeck, 237 Wis. 249, 296 N.W. 636 (1941).
Citing Haste v. Kentucky Unemployment Insurance Commission, 673 S.W.2d 740 (Ky. App. 1984), KUIC explained that although "[h]earsay evidence is admissible in an administrative proceeding, ... fact finding or legal determination cannot be based on hearsay alone." KUIC concluded that FCA's evidence was "legally insufficient to meet its burden" because there was not "a residuum of competent evidence to corroborate the employer's allegations." Moreover, KUIC found Palmer's testimony credible. She denied the reported behavior in her sworn testimony, which "constitutes substantial evidence supporting a finding that she did not act as reported." KUIC noted, inter alia, that Palmer's workload had increased after a co-worker left and she assumed additional work duties which "contributed to some inefficiency in her productivity." KUIC concluded that FCA "failed to meet its burden of proof as required by Brown Hotel. Therefore, it must be found that the claimant was discharged for reasons other than misconduct connected with the work and remains qualified to receive benefits."
Brown Hotel Co. v. Edwards, 365 S.W.2d 299 (Ky. 1962).
FCA timely filed a Verified Complaint in Fayette Circuit Court. In that proceeding, the FCA moved to strike the transcripts of the hearing that KUIC submitted on grounds that they contained inaccuracies. The transcripts reflect that they were transcribed by a freelance court reporter. By Order entered July 7, 2016, the circuit court explained that the audio tapes provided by the FCA would become part of the record and that the court would consider them as the official record while allowing the transcripts to remain in the record. On September 13, 2016, the court entered an Opinion and Order affirming, finding that KUIC's decision was supported by substantial evidence and that there was no error in its application of the law.
On September 27, 2016, FCA filed a timely Notice of Appeal to this Court. FCA first contends that KUIC's findings of fact are not supported by substantial evidence. FCA argues that "the appropriate question for this Court is whether Palmer's uncorroborated, self-serving statements were so compelling that no reasonable person could have failed to be persuaded by them." However, that statement of the issue reveals some degree of confusion on the part of the FCA regarding the correct standard of review on appeal.
The claimant has the burden of proving eligibility for benefit. The employer has the burden of proving disqualification for misconduct, which is in the nature of an affirmative defense. Brown Hotel Co. v. Edwards, 365 S.W.2d 299, 301 (Ky. 1962); Shamrock Coal Co., Inc. v. Taylor, 697 S.W.2d 952, 954 (Ky. App. 1985), overruled on other grounds by Kentucky Unemployment Insurance Commission v. Wilson, 528 S.W.3d 336 (Ky. 2017), abrogated on other grounds by Kentucky Unemployment Ins. Com'n v. Cecil, 381 S.W.3d 238 (Ky. 2012).
In McManus v. Kentucky Retirement Systems, 124 S.W.3d 454, 458 (Ky. App. 2003), this Court explained how the burden of proof impacts the standard of review on appeal:
When the decision of the fact-finder is in favor of the party with the burden of proof or persuasion, the issue on appeal is whether the agency's decision is supported by
substantial evidence . . . . Where the fact-finder's decision is to deny relief to the party with the burden of proof or persuasion, the issue on appeal is whether the evidence in that party's favor is so compelling that no reasonable person could have failed to be persuaded by it.See Kentucky Unemployment Ins. Commission v. Murphy, 539 S.W.2d 293, 294 (Ky. 1976) ("[F]indings of fact of that commission will not be disturbed in those instances where it has found against a claimant unless the evidence is so persuasive that one would have no choice but to find for the claimant.").
In the case before us, KUIC determined that FCA "failed to meet its burden of proof [that Palmer was discharged for misconduct] as required by Brown Hotel." Thus, the FCA has essentially reversed the proper burden of proof. According to McManus, the "so compelling" language applies only to the party having the initial burden of proof who has lost; i.e., who has been denied benefits. Palmer, however, was successful before the KUIC. Thus, the proper standard of review before this court is whether the evidence compelled a finding in FCA's favor. Wagoner v. Smith, 530 S.W.2d 368, 369 (Ky. 1975). It is a heavier standard than that of mere substantial evidence. See Workman v. Wesley Manor Methodist Home, 462 S.W.2d 898, 901 (Ky. 1971) (It is not necessary that a merely negative finding against the party with the burden of proof be supported by substantial evidence.).
As was its prerogative, KUIC found that Palmer's testimony denying her allegedly wrongful behavior was credible. "As the fact-finder, the KUIC has the exclusive authority to weigh the evidence and the credibility of the witnesses." Thompson v. Kentucky Unemployment Ins. Com'n, 85 S.W.3d 621, 626 (Ky. App. 2002). Our function in administrative law case "is one of review, not reinterpretation." Id. at 624. We may not substitute our "opinion as to the credibility of the witnesses, the weight given the evidence, or the inferences to be drawn from the evidence." Id. Although another factfinder may have decided this case differently, we cannot determine that the evidence compels a contrary finding.
FCA next contends that KUIC misapplied the law. Our review of this argument is de novo. Hutchison v. Kentucky Unemployment Ins. Com'n, 329 S.W.3d 353 (Ky. App. 2010). FCA submits that the "main issue" is whether KUIC properly applied the legal residuum rule. As set forth in Haste, 673 S.W.2d 740, that rule dictates that the findings of an administrative agency will be upheld despite partial reliance upon incompetent evidence where there is also competent evidence to support them. In Haste, the employer had discharged an employee for misconduct based upon blood alcohol test results. The court determined that the results were incompetent because a proper foundation had not been laid for their admission. The court held that the employer failed to meet its burden of proof because the evidence was insufficient to support a finding of misconduct without the test results.
FCA makes the conclusory statement that the "hearsay testimony ... did contain a residuum of competent evidence due to ... KRE 803(6)." Kentucky Rule of Evidence 803 provides in relevant part as follows:
The following are not excluded by the hearsay rules, even though the declarant is available as a witness:
. . . .
(6) Records of regularly conducted activity. A memorandum, report, record, or data compilation, in any form, of acts, events, conditions, opinions, or diagnoses, made at or near the time by, or from information transmitted by, a person with knowledge, if kept in the course of a regularly conducted business activity, and if it was the regular practice of that business activity to make the memorandum, report, record, or data compilation, all as shown by the testimony of the custodian or other qualified witness, unless the source of information or the method or circumstances of preparation indicate lack of trustworthiness. The term "business" as used in this paragraph includes business, institution, association, profession, occupation, and calling of every kind, whether or not conducted for profit ... the business records exemption [which] is applicable to the exhibits as submitted and authenticated by the testimony."
In previous sections of its Brief, FCA refers to numbered exhibits, but the exhibits which FCA submitted at the referee hearing consist of 41 pages of various documents entered collectively as employer's exhibit "1." (Certified record from the KUIC, Volume 2, pp. 247-287). In its reply brief, FCA contends that exhibits in electronic format were not made a part of the certified record. It appears that FCA may be referring to a CD of exhibits which it submitted with its Exhibit List prior to the referee hearing. As the referee explained at the November 2, 2015, hearing, "nothing in the file is a permanent part of the record unless it's offered during this proceeding." See 787 KAR 1:110 §2 (2)(a)1 "[A]ll appeals to the commission shall be heard upon the records of the division and the evidence and exhibits introduced before the referee." --------
After our review of the record, we are not persuaded that KUIC erred in it application of the law. As the circuit court explained, FCA's argument goes to the weight of the evidence which KUIC addressed in its findings, duly noting its application of Haste and its reliance upon Palmer's explanation of why her job performance was unsatisfactory. We find no error in its reasoning.
Consequently, we affirm the September 13, 2016, Opinion and Order of the Fayette Circuit Court.
ALL CONCUR. BRIEF FOR APPELLANT: Larry Roberts
Fayette County Attorney Steven P. Stadler
Richard E. Vimont
Assistant Fayette County Attorneys
Lexington, Kentucky BRIEF FOR APPELLEES: KENTUCKY UNEMPLOYMENT
INSURANCE COMMISSON:
Patrick B. Shirley
Frankfort, Kentucky