Opinion
No. 1772 C.D. 2013
04-09-2014
Aqua America, Inc., Petitioner v. Unemployment Compensation Board of Review, Respondent
BEFORE: HONORABLE BONNIE BRIGANCE LEADBETTER, Judge HONORABLE PATRICIA A. McCULLOUGH, Judge HONORABLE ROCHELLE S. FRIEDMAN, Senior Judge OPINION NOT REPORTED MEMORANDUM OPINION BY JUDGE McCULLOUGH
Aqua America, Inc. (Employer) petitions for review of the August 29, 2013 order of the Unemployment Compensation Board of Review, which reversed a referee's determination and held that Debra Brennan (Claimant) is not ineligible for benefits under section 402(e) of the Unemployment Compensation Law (Law).
Act of December 5, 1936, Second Ex. Sess., P.L. (1937) 2897, as amended, 43 P.S. §802(e). Section 402(e) of the Law provides that an employee shall be ineligible for compensation for any week in which her unemployment is due to her discharge or temporary suspension from work for willful misconduct connected with her work. 43 P.S. §802(e). The burden of proving willful misconduct rests with the employer. Guthrie v. Unemployment Compensation Board of Review, 738 A.2d 518, 521 (Pa. Cmwlth. 1999).
Although willful misconduct is not defined by statute, our courts have described it as: (1) the wanton and willful disregard of the employer's interests; (2) the deliberate violation of rules; (3) the disregard of standards of behavior that an employer can rightfully expect from his employee; or (4) negligence which manifests culpability, wrongful intent, evil design, or intentional and substantial disregard for the employer's interests or the employee's duties and obligations. Guthrie. When a charge of willful misconduct is based on the violation of a work rule, the employer must prove the existence of the rule, the reasonableness of the rule, and the fact of its violation. Owens v. Unemployment Compensation Board of Review, 748 A.2d 794, 798 (Pa. Cmwlth. 2000).
Claimant worked for Employer from November 3, 2010, through March 22, 2013; her most recent position was as a manager of customer accounts. Employer discharged Claimant for allegedly violating its anti-harassment policy. (Board's Findings of Fact Nos. 1-2.) The local job center granted Claimant's application for benefits, and Employer appealed. A referee held a hearing on June 5, 2013; both parties participated without benefit of counsel.
Carrie Panetta (Panetta), Employer's human resources director, was the only witness to testify for Employer at the hearing. Panetta testified that Claimant was discharged for violating Employer's anti-harassment policy. (Reproduced Record (R.R.) at 47a.) Panetta explained that the matter arose in response to an email from Danika Owens (Owens) to her supervisor, William Kephart (Kephart), on February 11, 2013, complaining that Claimant made racially offensive comments to her during a conversation on January 25, 2013. In the email, Owens stated that Claimant called her into a conference room and informed her that another employee had filed a lawsuit against Employer claiming racial discrimination and specifically naming Claimant, Kephart, and two other employees. According to Owens' email, Claimant said she could not believe that Owens was black because Owens had a different work ethic than "the rest of them," and that "When God was giving out color, you got in the wrong line. You were supposed to get in the white line, not the black line." Owens stated that Claimant made similar comments during another meeting a week later. Owens added that she found Claimant's language and demeanor offensive. She stated that she had dealt with unprofessional comments and conduct from Claimant in the past but had reached her breaking point, and she requested Kephart to handle the matter appropriately. Employer introduced the email into evidence. (Employer's exhibit 1, R.R. at 53a.)
Panetta testified that she met with Owens on March 18, 2013, and that Owens repeated the allegations in the email and was very upset. Panetta said that Employer received a complaint of harassment and racial discrimination from the EEOC later that day which had been filed by Owens. Panetta stated that she spoke with other employees in Claimant's department over the next three days and all of them confirmed that Claimant made inappropriate comments during their employment. After speaking with the other employees, Panetta called Claimant, who was on leave pursuant to the Family Medical Leave Act (FMLA) at the time. According to Panetta, Claimant denied making specific remarks but said she had heard about the email and had apologized to Owens. Panetta stated that, given the issues and the number of people who complained, Employer decided to terminate Claimant's employment. (R.R. at 48a-49a.)
Claimant testified that she was planning to take FMLA leave and had a meeting with Owens, who was going to fill in for Claimant while she was out. According to Claimant, Owens was aware that human relations responsibilities involved disciplinary actions and expressed criticism for people who brought discrimination claims. Claimant said she told Owens that everyone has a right to complain if she feels she is being harassed. Claimant specifically denied ever stating that Owens should have been white. (R.R. at 49a-50a.)
Claimant testified that there were many disciplinary problems in her department and that she disciplined employees appropriately as directed by Kephart, who had approved all of her disciplinary actions. Claimant stated that when Kephart showed her Owens' email, she apologized to Owens about any misunderstanding; Owens accepted her apology, the two women hugged, and Claimant left. Claimant said a month into her FMLA leave, she received a letter from Employer terminating her employment. Claimant denied having a subsequent team meeting and denied speaking negatively or disrespectfully to any of her coworkers. (R.R. at 50a.)
In relevant part, the letter from Employer's Vice President of Human Resources states as follows:
This letter will confirm our conversation on March 21, 2013, that your employment with [Employer] is terminated effective March 23, 2013. As you know, we've received numerous complaints from employees that you displayed unprofessional, unethical and harassing conduct towards the employees you managed. In more than one instance, we were able to confirm comments you made that were inappropriate or of a racial nature. Your behavior is a clear violation of the Company's Anti-harassment and EEO policies and as a result the Company has legal risk and exposure. . . . If you have any questions, please feel free to contact me . . . .(R.R. at 52a.)
The referee accepted Panetta's testimony as credible, rejected Claimant's testimony as not credible, and found that Claimant made disparaging remarks to other employees that had racial overtones and were insensitive, derogatory, and offensive. The referee accepted Panetta's testimony that Claimant's conduct violated Employer's anti-harassment policy and concluded that Claimant's conduct was contrary to standards that Employer had a right to expect of its employees. Accordingly, the referee held that Claimant was ineligible for benefits due to willful misconduct under section 402(e) of the Law.
Claimant appealed to the Board, arguing that Employer presented no competent evidence to establish willful misconduct and the referee erred in relying solely on hearsay evidence. The Board agreed and reversed the referee's decision. The Board first noted that Employer presented no evidence that a policy existed or that Claimant was aware of its policy. The Board recognized, however, that an employer can establish willful misconduct by demonstrating that an employee's conduct constituted a disregard for standards of behavior that an employer can rightfully expect from an employee. The Board stated that making racially insensitive remarks to coworkers falls within that category of disqualifying conduct.
However, the Board determined that Employer presented no firsthand evidence of Claimant's allegedly racist remarks. The Board further noted that Claimant consistently denied making offensive remarks and concluded that her admitted apology for any misunderstanding was inadequate to corroborate Employer's hearsay evidence. Acknowledging Employer's right to discharge Claimant following its investigation, the Board concluded that the referee erred in relying solely on hearsay evidence and that in the absence of firsthand testimony, it was constrained to hold that Claimant was not ineligible for benefits under section 402(e).
Hearsay is defined as a "statement, other than one made by the declarant while testifying at the trial or hearing, offered in evidence to prove the truth of the matter asserted." Pa.R.E. 801(c). Hearsay is not admissible except as provided by the Pennsylvania Rules of Evidence, other rules prescribed by the Pennsylvania Supreme Court, or by statute. Pa.R.E. 802.
On appeal to this Court, Employer argues that the email describing Claimant's discriminatory and harassing comments was not hearsay. Alternatively, Employer argues that Claimant did not object to the admission of the email and that the contents of the email are corroborated by other evidence of record.
Our scope of review is limited to determining whether constitutional rights have been violated, whether an error of law has been committed, or whether findings of fact are supported by substantial evidence. Section 704 of the Administrative Agency Law, 2 Pa.C.S. §704.
In Walker v. Unemployment Compensation Board of Review, 367 A.2d 366 (Pa. Cmwlth. 1976), this Court established the following guidelines: (1) hearsay evidence, properly objected to, is not competent evidence to support a finding of the Board; and (2) hearsay evidence, admitted without objection, will be given its natural probative effect and may support a finding of the Board if it is corroborated by any competent evidence, but a finding of fact based solely on hearsay will not stand. Id. at 370.
Employer first contends that neither the email nor Panetta's testimony was hearsay because neither was offered to prove the truth of Claimant's statements, but rather, to prove that Claimant made offensive statements and thereby establish the basis for Employer's decision to discharge her. (Employer's brief at 11-13.) This argument clearly misses the mark, as the issue before us is not whether Employer established a valid reason to terminate Claimant's employment but, rather, whether Claimant engaged in conduct that disqualified her from receiving unemployment compensation. Because Employer challenged Claimant's right to benefits by asserting that Claimant's offensive comments constituted willful misconduct, the fact at issue was whether Claimant made offensive statements to coworkers as Employer alleged. Employer bore the burden to establish that fact, Guthrie v. Unemployment Compensation Board of Review, 738 A.2d 518, 521 (Pa. Cmwlth. 1999), but offered no firsthand testimony to support its assertions.
We have repeatedly recognized that there is a sharp legal distinction between the cause of the employee's discharge from the employer's standpoint and willful misconduct which bars unemployment compensation benefits. Maldonado v. Unemployment Compensation Board of Review, 503 A.2d 95, 97 (Pa. Cmwlth. 1986).
Employer next argues that the referee properly relied on the evidence submitted because Claimant failed to object to its admission. However, it is well settled that hearsay evidence admitted without objection may support a finding of fact only if it is corroborated by competent evidence. Walker.
Finally, Employer argues that Panetta's testimony concerning her firsthand investigation into employees' complaints supports Employer's decision to terminate Claimant's employment. While that testimony is competent to establish that Employer discharged Claimant because Panetta received complaints from other employees, it is hearsay with respect to whether Claimant engaged in the complained-of conduct.
Indeed, we agree with the Board that all of the evidence Employer presented was hearsay. Panetta, the only witness to testify on Employer's behalf, stated that she initiated an investigation following an email complaint by Owens, she subsequently received complaints from other employees about statements allegedly made by Claimant, and based on those complaints, decided to terminate Claimant's employment. Because neither Owens nor any other employee testified at the hearing, and Panetta did not witness Claimant making any statements, Panetta's testimony that Claimant made such statements is inadmissible hearsay. To the extent Employer relies on documentary evidence, we note that neither Employer's Vice President of Human Relations nor Owens testified at the hearing; as with Panetta's testimony, the discharge letter and email may be competent to establish that complaints were made but are hearsay as to whether Claimant made any offensive comments.
We have previously explained that "[h]earsay cannot corroborate hearsay." Sule v. Philadelphia Parking Authority, 26 A.3d 1240, 1244 (Pa. Cmwlth. 2011). Thus, because the statements made to Panetta, Owens' email, and Employer's termination letter are all inadmissible hearsay, they may not corroborate one another. Moreover, although an admission by Claimant would corroborate Employer's hearsay evidence, Employer offered no competent evidence that Claimant admitted making offensive remarks, and Claimant repeatedly denied making such statements when questioned by Panetta during the hearing.
"[T]he admission of a party is an exception to the hearsay rule and is competent to sustain a finding of fact." Borough of Grove City v. Unemployment Compensation Board of Review, 928 A.2d 371, 374 (Pa. Cmwlth. 2007). --------
Accordingly, we affirm.
/s/_________
PATRICIA A. McCULLOUGH, Judge ORDER
AND NOW, this 9th day of April, 2014, the order of the Unemployment Compensation Board of Review, dated August 29, 2013, is affirmed.
/s/_________
PATRICIA A. McCULLOUGH, Judge