Opinion
No. 1655 C.D. 2014
04-28-2015
Thomas K. Holtslander, Petitioner v. Unemployment Compensation Board of Review, Respondent
BEFORE: HONORABLE DAN PELLEGRINI, President Judge HONORABLE ROBERT SIMPSON, Judge HONORABLE ROCHELLE S. FRIEDMAN, Senior Judge
OPINION NOT REPORTED
MEMORANDUM OPINION BY JUDGE SIMPSON
Thomas K. Holtslander (Claimant), representing himself, petitions for review of an order of the Unemployment Compensation Board of Review (Board) that found him ineligible for unemployment compensation (UC) benefits under Section 402(e) of the Unemployment Compensation Law (Law) (relating to willful misconduct). The Board determined Claimant was ineligible for benefits because he violated Suburban Propane's (Employer) policy against selling company assets by allowing a barter system of services for scrap material. Claimant asserts he did not violate the policy because Employer did not enforce the policy for the prior manager, and he merely continued a past practice that benefited Employer. Claimant also argues the Board's findings are not supported by substantial evidence. Discerning no error below, we affirm.
Act of December 5, 1936, Second Ex. Sess., P.L. 2897 (1937), as amended, 43 P.S. §802(e).
I. Background
Claimant started working for Employer in 2009. From November 2011 until the date of his discharge, Claimant served as customer service manager. His duties included accounting for company assets and proper disposal, sale and maintenance of those assets, including scrap metal and propane tanks. In April 2014, Employer discharged Claimant for violating its policy regarding company assets. Claimant applied for UC benefits, which were granted. Employer appealed.
A referee held a hearing. Claimant, then represented by counsel, testified on his own behalf and presented the testimony of two witnesses, the prior manager he replaced, David Hess (Hess), and the employee that he allowed to remove and sell scrap, William Mauer (Mauer). Employer presented the testimony of Chris Daly, its regional general manager (Employer's Witness).
Claimant testified he permitted Mauer to remove scrap from the work site in exchange for performing extra duties. In so doing, he continued the practice of his predecessor, Hess. He stated he did not know this past practice was unauthorized until the date of his discharge. Claimant did not deny awareness of Employer's policy, and he admitted he did not record the employee's extra duties or the value or amount of the scrap removed. Hess and Mauer also testified that Mauer removed scrap in exchange for services while Hess was manager.
Employer's Witness testified the policy pertained to custody and disposal of assets, including scrap metal. Specifically, he advised Claimant was "responsible for accounting of all company assets, intangible and physical assets and the proper disposal, sale and maintenance of those assets while in charge of the location." Referee's Hr'g, Notes of Testimony (N.T.), 6/10/14, at 6. Employer's Witness testified that Employer did not know of the "past practice" until the meeting with Claimant on the day of his discharge. During the meeting, Claimant admitted he was aware of Employer's policy regarding assets, and he did not record or track the assets Mauer removed. Employer's Witness confirmed Claimant signed the acknowledgement for the employee handbook and the code of business conduct that outlined the policy.
Based on the evidence presented, the referee made the following pertinent findings:
2. [Employer] has a policy which can provide for the immediate discharge of employees who failed to maintain a responsible accounting for all [E]mployer assets and who failed to properly dispose of or sell those assets in accordance with [Employer's] policies.
3. [Claimant] should have been aware of [Employer's] policy.
***
6. During [Claimant's] meeting [with the regional general manager] [Claimant] admitted to [Employer] that an employee, [Mauer], had been permitted to remove and sell scrap from [Employer's] premises in exchange for work this employee did outside his regular duties.
7. No paperwork or any other documentation whatsoever was generated to memorialize any duties or services that this employee had been providing to [Employer] or the taking and selling of scrap by this employee as compensation for any additional duties or services he may have been supplying at this work location.
8. [Claimant's] employment was terminated on April 11, 2014 for failing to maintain responsibility for the accounting of all assets and for the proper disposal or sale of [Employer] assets in violation of [Employer's] policies.Referee's Dec., 6/12/14, Findings of Fact (F.F.) Nos. 2-3, 6-8. The referee determined Employer established willful misconduct based on a policy violation, and thus deemed Claimant ineligible for benefits under Section 402(e) of the Law. The referee included an extensive discussion of Claimant's evidence of past practice. In particular, the referee explained that there was no evidence Employer knew of the past practice, that Claimant's evidence as to the frequency of the past practice was inconsistent, and that the Claimant's failure to document the past exchanges failed to support the blanket assertion that the value of scrap was far less than the value of the services provided.
Claimant appealed to the Board. The Board affirmed the referee's denial of benefits, "adopt[ing] and incorporat[ing] the [r]eferee's findings and conclusions." Bd. Op., 8/20/14, at 1. Claimant now petitions for review.
II. Discussion
On appeal, Claimant argues there is insufficient evidence of willful misconduct. He contends Employer did not establish a policy violation because he merely continued his predecessor's past practice regarding scrap material. Claimant challenges Findings of Fact Nos. 2 and 3 as not supported by substantial evidence, and Finding of Fact No. 6 as not accounting for his adherence to a past practice.
Our review is limited to determining whether the necessary findings of fact were supported by substantial evidence, whether errors of law were committed, or whether constitutional rights were violated. Doyle v. Unemployment Comp. Bd. of Review, 58 A.3d 1288 (Pa. Cmwlth. 2013).
The Board's findings of fact "are conclusive on appeal as long as they are supported by substantial evidence" in the record. Phila. Gas Works v. Unemployment Comp. Bd. of Review, 654 A.2d 153, 157 (Pa. Cmwlth. 1995). Substantial evidence is evidence which a reasonable mind would accept as adequate to support a conclusion. Umedman v. Unemployment Comp. Bd. of Review, 52 A.3d 558 (Pa. Cmwlth. 2012).
Section 402(e) of the Law provides, "[a]n employe shall be ineligible for compensation for any week ... [i]n which his unemployment is due to his discharge ... from work for willful misconduct connected with his work ...." 43 P.S. §802(e). Willful misconduct is defined by the courts as: (1) wanton and willful disregard of an employer's interests; (2) deliberate violation of rules; (3) disregard of the standards of behavior which an employer can rightfully expect from an employee; or, (4) negligence showing an intentional disregard of the employer's interests or the employee's duties and obligations. Johnson v. Unemployment Comp. Bd. of Review, 87 A.3d 1006 (Pa. Cmwlth. 2014) (citing Grieb v. Unemployment Comp. Bd. of Review, 827 A.2d 422 (Pa. 2002)). The employer bears the burden of establishing a claimant engaged in willful misconduct. Id.
The issue of whether a claimant's conduct constitutes willful misconduct is a question of law fully reviewable by this Court. Id.; Ductmate Indus., Inc. v. Unemployment Comp. Bd. of Review, 949 A.2d 338 (Pa. Cmwlth. 2008). Where, as here, the determination of willful misconduct is based on the violation of a policy, an employer must establish the existence of the policy, the reasonableness of the policy, the claimant's knowledge of the policy, and its violation. Id. Once an employer proves a policy violation, "the burden then shifts to the claimant to demonstrate that there was good cause for the violation by demonstrating that uneven enforcement has rendered a policy unreasonable or that the particular circumstances at issue justified the violation." Chapman v. Unemployment Comp. Bd. of Review, 20 A.3d 603, 607 (Pa. Cmwlth. 2011).
A. Policy Violation
The policy here pertained to proper accounting and disposal of assets, including scrap metal. Employer's Witness testified scrap included "furnaces, parts that we remove from customers when we install new equipment," boilers and duct work. N.T. at 8. The policy provided: "All supervisors, officers and employees are required to protect the tangible and intangible ... assets of [Employer] from misuse or misappropriation." See Certified Record (C.R.), Item No. 7, Code of Business Conduct and Ethics. Employer established the existence of the policy, and that Claimant should have been aware of it. F.F. Nos. 2-3. Employer's Witness testified that Claimant conceded he understood the policy with regard to scrapping or selling any physical asset, and that he knew he should have done a physical inventory and recorded the assets. N.T. at 9-10. Claimant acknowledged he received copies of the policy. See C.R. at Item No. 7, Non-union Employee Record of Policy Documents Receipt; N.T. at 42.
Employer terminated Claimant's employment for violating other policies, including permitting Mauer to take home company vehicles when off-duty, and sale of a propane tank without a data plate, all of which were addressed during the hearing. However, the Board's decision pertains to only the policy for sale and recording of assets because one policy violation sufficed to warrant discharge.
In addition, the policy requiring a manager to maintain assets, including scrap material, is reasonable as scrap material has some value. However, because Claimant did not account for the amount or type of scrap before Mauer removed it, that value is unknowable. Mauer's activities in that regard were unmonitored and unsupervised.
Significantly, there is no dispute that Claimant permitted Mauer to remove and sell scrap, such as boilers and duct work. See Pet'r's Br. at 10-11; N.T. at 36, 43. In fact, Claimant admitted he violated the policy. See C.R., Item No. 2, Claimant Questionnaire.
When Employer's Witness read the policy during the hearing, and asked Claimant whether he followed it, he replied that as to scrap, "there was the system that [Mauer] took some scrap randomly." N.T. at 43. Claimant clarified that this bartering system occurred "very seldom." Id. at 44. Essentially, Claimant allowed Mauer to take assets despite knowledge that it violated policy because "[Mauer] said it happened when [Hess] was here." N.T. at 14. Claimant also admitted he had no accounting of the value of the scrap or the services provided in exchange for Employer's alleged benefit. Id. at 43-44. Thus, the record supports the Board's finding that Claimant did not account for assets in compliance with Employer's policy. F.F. No. 7.
Contrary to Claimant's assertions, the policy did not differentiate between fixed assets, like propane tanks, and other scrap. N.T. at 10, 43 ("protect the tangible and intangible assets ... from misuse and appropriation"); F.F. No. 2 ("accounting for all employer assets") (emphasis added). Thus, that Claimant did not permit Mauer to take propane tanks is immaterial to this policy violation.
Claimant also contends the findings are inconsistent with the testimony of first-hand witnesses, whose version of events should be credited. However, the Board, as the ultimate fact-finder, is entitled to make its own determinations as to witness credibility and evidentiary weight, and to resolve conflicts in the evidence. Peak v. Unemployment Comp. Bd. of Review, 501 A.2d 1383 (Pa. 1985); Matthews v. Unemployment Comp. Bd. of Review, 86 A.3d 322 (Pa. Cmwlth. 2014).
Because substantial evidence supports the finding of a violation here, Employer met its burden of proving a policy violation.
B. Good Cause
Next, we consider whether Claimant had good cause to violate the policy. Claimant asserts Employer did not enforce the policy, and his conduct was consistent with the past practice accepted by Employer. Essentially, Claimant contends Employer's acceptance of this past practice constituted good cause for his violation.
Claimant bears the burden of proving lack of enforcement of the policy, such as by allowing an actual practice that conflicts with the policy. Chapman; Beaver Falls v. Unemployment Comp. Bd. of Review, 441 A.2d 510, 512 (Pa. Cmwlth. 1982) (once violation is established, burden shifts to claimant to show policy was not uniformly enforced). Thus, Claimant must establish his policy violation constitutes a past practice. Beaver Falls.
"For an action to be considered acceptable as past practice in the employment situation, it must be a practice which is unequivocal, clearly enunciated and acted upon, readily ascertainable over a reasonable period of time as fixed and established practice accepted by both employer and employees." Seton Co. v. Unemployment Comp. Bd. of Review, 663 A.2d 296, 299 (Pa. Cmwlth. 1995) (emphasis added); see generally Sch. Dist. of Phila. v. Phila. Fed'n of Teachers, Local 13, 651 A.2d 1152 (Pa. Cmwlth. 1994) (explaining standard for establishing past practice in collective bargaining context).
Claimant asserts that three first-hand witnesses, himself, Hess and Mauer verified the existence of a past practice of exchanging scrap for extra duties Mauer performed over a few years under Hess and Claimant as managers. N.T. at 27, 29, 49, 51. From our careful review of the transcript, we must disagree with Claimant's characterization of the barter system as a "past practice."
Hess consistently disclaimed the barter system as a past practice. To the contrary, he testified, "[w]ell, I don't know that it was necessarily a practice. It was a - you know, it was an occasion or one or two occasions." N.T. at 22. When pressed on the point, he explained "it didn't happen very often. It was an - you know, it was an isolated, you know, maybe a couple a times." Id. Hess testified that as to the single incident he recalled the exchange of services for scrap was actually Mauer's suggestion as opposed to his managerial decision. Id. (Mauer suggested "how about I just load that scrap up when I'm done."); see also id. at 23 ("to be honest with you, that's the only time I can remember"). He emphasized there was no understanding that Mauer could take occasional pieces of scrap, "it wasn't like we had a system worked out that hey, you plow and you get all this scrap," it was random. Id. at 24. Critical to our current discussion, Hess also testified his supervisor was not aware of what he described as an isolated incident. Id. at 27.
The mere fact that a practice occurred in the past is not sufficient to show a "past practice" in the legal sense. Employer's acceptance of the practice is also necessary. Seton Co., 663 A.2d at 299 (holding no substantial evidence to support Board's finding of past practice when "there is no testimony whatsoever in the record that management knew of or accepted the practice..."); see also Palmieri v. Unemployment Comp. Bd. of Review (Pa. Cmwlth., Nos. 2106, 2107 C.D. 2011, filed Aug. 14, 2012) (unreported), 2012 WL 8700470 (claimant failed to establish past practice because director testified she had no knowledge of the practice; reasoning that under Seton Co., past practices must be accepted by an employer).
There is no indication here that Employer sanctioned any barter system, or that Employer was even aware of it. Indeed, Claimant cites no record evidence that suggests Employer's knowledge of the policy violations. His testimony reflects Claimant did not inform Employer of the practice, although he was aware that Employer did not know what Hess was doing. N.T. at 40. Further, Claimant provided insufficient credible evidence to show Employer inconsistently enforced its policies or condoned Claimant's conduct. Because he did not establish Employer's knowledge or consent to the purported past practice, Claimant did not prove Employer authorized deviations from the policy.
Aside from requiring Employer's knowledge and acceptance, to qualify as a "past practice" in the legal sense, a practice must be readily ascertainable over a reasonable period of time. Seton Co. Claimant's own testimony belies the ready discernment of the barter system by a manager who is regularly on-site. Of note, Claimant admitted that he did not know about this purported past practice for the first six months he was manager. N.T. at 35.
Specifically, Claimant conceded that when he became manager, he was not aware of the single occasion of bartering that occurred under Hess. Id. Although Hess discussed his management style with Claimant as part of the transition, there is no evidence that Hess advised Claimant about the barter system. Rather, Claimant discovered the practice after he noticed there was no scrap where he expected to see it, and he brought it to Mauer's attention. It was only when Mauer advised he was taking the scrap in exchange for services that Claimant learned about this arrangement. Mauer, who took the scrap without express permission, not prior manager Hess, informed Claimant that it was the way it had always been.
Additionally, the fact-finder did not credit Claimant's testimony regarding the past practice, explaining "his testimony raise[d] a glaring discrepancy" regarding its frequency. Referee's Dec. at 3. In particular, the referee highlighted testimony that tended to show the practice under the former manager, Hess, was occasional, in contrast to testimony tending to prove that under Claimant the practice became continual and ongoing.
Under these circumstances, the Board credited the testimony of Employer's Witness that Employer had no awareness of this practice, and did not authorize it. We are not in a position to question such credibility evaluations on appeal. Peak. That credibility determination entails the defeat of Claimant's "past practice" defense. Seton Co.; Palmieri.
In any event, "prior tolerance does not justify repeated violations." Love v. Unemployment Comp. Bd. of Review, 434 A.2d 1336, 1337 (Pa. Cmwlth. 1981); see also Morris v. Unemployment Comp. Bd. of Review (Pa. Cmwlth., No. 2383 C.D. 2010, filed June 14, 2011) (unreported), 2011 WL 10858418. Further, we "must view the record in a light most favorable to the party which prevailed before the Board, giving that party the benefit of all logical and reasonable inferences deducible from the evidence." Stringent v. Unemployment Comp. Bd. of Review, 703 A.2d 1084, 1087 (Pa. Cmwlth. 1997). Here, that was Employer.
Because Claimant did not meet his burden of proving Employer accepted the purported past practice, which violated its policy, Claimant did not establish good cause for his policy violations.
III. Conclusion
As the Board's findings that Claimant violated Employer's policy are based on substantial evidence, and Claimant did not establish good cause for his violation, we affirm the Board.
/s/_________
ROBERT SIMPSON, Judge ORDER
AND NOW, this 28th day of April, 2015, the order of the Unemployment Compensation Board of Review in the above-captioned matter is AFFIRMED.
/s/_________
ROBERT SIMPSON, Judge BEFORE: HONORABLE DAN PELLEGRINI, President Judge HONORABLE ROBERT SIMPSON, Judge HONORABLE ROCHELLE S. FRIEDMAN, Senior Judge
OPINION NOT REPORTED
DISSENTING OPINION BY PRESIDENT JUDGE PELLEGRINI
Claimant was discharged because he allowed an employee to remove and sell scrap from Employer's premises in exchange for work that this employee did outside of his regular duties. This was in violation of Employer's policy which states, "All supervisors, officers and employees are required to protect the tangible and intangible ... assets of [Employer] from misuse or misappropriation." Claimant also admitted that he was aware of this policy and it is on this basis that the majority affirms the Board's finding that he was guilty of willful misconduct under Section 402(e) of the Unemployment Compensation Law. I disagree with the majority's affirmance of the Board's decision because I do not believe that it was established that Claimant's conduct was willful.
Act of December 5, 1936, Second Ex. Sess., P.L. 2897 (1937), as amended, 43 P.S. §802(e). --------
The undisputed testimony is that after he noticed that there was no scrap, Claimant asked an employee and was told that he was allowed to take the scrap by a former manager in exchange for work. The Referee, whose findings the Board adopted, found that "[t]here is no doubt that this employee was a good and valuable employee whom the claimant and his predecessor could have relied upon to perform numerous services and duties when called upon." Claimant's mistake was that he accepted this "good and valuable employee's" representation that this arrangement was permitted. The employee's representation was confirmed by the testimony of Claimant's predecessor who stated that he allowed it to occur on several occasions, albeit with a record of the scrap that was taken and the work that it represented.
Claimant's mistake was that he relied on the representations of this "good and valuable" employee that he had been allowed to take the scrap metal in exchange for performing other work in the past, but that mistake does not constitute willful misconduct because there was no showing that Claimant intentionally violated Employer's policy.
Accordingly, I respectfully dissent.
/s/_________
DAN PELLEGRINI, President Judge