BRIEF FOR APPELLANT: Stephen S. Frockt Prospect, Kentucky BRIEF FOR APPELLEE: Amy F. Howard Kentucky Unemployment Insurance Commission Frankfort, Kentucky
NOT TO BE PUBLISHED
APPEAL FROM JEFFERSON CIRCUIT COURT
HONORABLE AUDRA J. ECKERLE, JUDGE
ACTION NO. 10-CI-002378
BEFORE: CLAYTON, STUMBO, AND TAYLOR, JUDGES. CLAYTON, JUDGE: Kirk A. Hudson appeals from an opinion and order of the Jefferson Circuit Court affirming the Kentucky Unemployment Insurance Commission's (hereinafter "KUIC" or "Commission") denial of unemployment benefits. Upon review, we affirm.
FACTUAL AND PROCEDURAL BACKGROUND
Federal Express Corporation (hereinafter "Federal Express") employed Hudson full-time as a swing courier from March 20, 2005, until his discharge from employment on September 16, 2009. The incident that led to his discharge occurred on September 10, 2009. On that day, while making a scheduled delivery at a residence, Hudson parked the delivery vehicle on an incline. After he exited the vehicle and was making the delivery on the front porch of the residence, the vehicle rolled backward, hitting a tree and a fence before stopping.
According to the record, Hudson explained that he had parked the vehicle, pulled the emergency brake about one-third (1/3) of the way up, took the keys out of the ignition, and put them in his pocket. Federal Express, however, after an investigation, concluded that Hudson was at fault because he had not properly parked the vehicle, which it assumed was the cause of the accident. He was terminated on September 16, 2009.
Following his discharge, Hudson applied for unemployment insurance benefits. On October 22, 2009, the division of unemployment insurance issued its notice of determination and denied benefits. The division's opinion held that Hudson violated Federal Express's policy or rule and that his actions were in willful disregard of the employer's business interests.
Hudson appealed. A referee hearing was held on December 17, 2009, and the referee set aside the division's determination. The referee determined that Hudson had followed Federal Express's protocol and that the vehicle malfunctioned, which caused the accident.
Next, Federal Express appealed the decision to KUIC. On March 24, 2010, the Commission reversed the referee's decision and noted that both parties agreed that setting the emergency brake one-third (1/3) of the way is unacceptable and that the emergency brake should have been fully set. The Commission gave no reason for its reversal of the referee's opinion but simply commented "that the claimant was discharged from the employment for reasons of misconduct connected with the work[.]" Further, KUIC ordered that Hudson pay back his previously received benefits, which ultimately were valued at $8,301.
Then, on April 7, 2010, Hudson appealed the KUIC decision to the Jefferson Circuit Court. Besides his claims for unemployment insurance benefits, he brought additional claims against Federal Express. Later, these claims were severed and moved to federal district court. Nonetheless, Jefferson Circuit Court kept its jurisdiction of the unemployment insurance benefit claim, and on February 24, 2011, affirmed the decision of the KUIC denying the unemployment insurance benefits. Hudson now appeals from this order.
STANDARD OF REVIEW
When we review an administrative agency's adjudicatory decision, our authority is somewhat limited. See American Beauty Homes Corp. v. Louisville and Jefferson County Planning and Zoning Comm'n, 379 S.W.2d 450 (Ky. 1964). In general, "an administrative agency's findings of fact are reviewed for clear error, and its conclusions of law are reviewed de novo." Hutchison v. Kentucky Unemployment Ins. Commission, 329 S.W.3d 353, 356 (Ky. App. 2010).
The role of the circuit court is to review the administrative decision, not to reinterpret or reconsider the merits of the claim. Kentucky Unemployment Ins. Comm'n v. King, 657 S.W.2d 250, 251 (Ky. App. 1983). When the circuit court's decision is appealed to our Court "[o]ur task is to determine whether or not the circuit court's findings upholding the [administrative decision] are clearly erroneous. CR [Kentucky Rules of Civil Procedure] 52.01." Jones v. Cabinet for Human Res., Div. for Licensure and Regulations, 710 S.W.2d 862, 866 (Ky. App. 1986).
Thus, at this level of review, Hudson must demonstrate that the trial court was clearly erroneous in finding that the Commission's decision was supported by substantial evidence. A decision is clearly erroneous when it is "unsupported by substantial evidence." Danville-Boyle County Planning and Zoning Comm'n v. Prall, 840 S.W.2d 205, 208 (Ky. 1992). And, substantial evidence is evidence "that has sufficient probative value to induce conviction in the minds of reasonable people." Thompson v. Kentucky Unemployment Ins. Comm'n, 85 S.W.3d 621, 624 (Ky. App. 2002). Therefore, we keep in mind that we are a court of review and not of reinterpretation. Still, we are mindful that conclusions of law are reviewed de novo. Hutchison, 329 S.W.3d at 356.
Hudson presents two major arguments to support the rationale that the trial court's decision should be reversed. The first argument involves a due process claim, and the second argument states that the trial court incorrectly determined that substantial evidence existed to support the Commission's finding. We will begin our analysis by addressing the due process argument.
Hudson claims that his due process rights were violated by Federal Express's inclusion of arguments supporting its position in the notice of appeal to KUIC without providing him a copy of the notice. On January 6, 2010, Federal Express filed its notice of appeal regarding the referee's decision about Hudson's unemployment benefits. Besides informing the Commission about the appeal, it also included written arguments for reversal. Hudson, however, was never provided a copy of the notice of appeal and, thus, a copy of the arguments. Consequently, he maintains that his due process rights were violated.
Both the Commission and Federal Express were involved at the trial court level. Federal Express's representative elucidated that it was not required to serve its notice on Hudson nor is there any statutory or regulatory rule precluding it from putting arguments in the notice of appeal. And Federal Express argued that any similarities between the arguments in the notice of appeal and KUIC's final decision are because both writings are based on the same facts and analogous legal conclusions. The Commission also disputed the due process claim in the trial court. It agreed with Federal Express's arguments and added that because of agency policy, it did not rely on their arguments in reaching its final decision.
Here, in addition to recounting its previous reasoning, KUIC emphatically restates that it did not use or consider Federal Express's notice of appeal when it made its final determination. The Commission has a long-standing rule that it does not consider materials that it receives from one party that have not been served on opposing parties. To support its claim, the Commission provided the following language which is found in its generic acknowledgment of receipt of an appeal and sent to all parties to an appeal:
Each of the parties may submit, in writing, summary statements or briefs. Appellant's brief shall be due ten (10) days from the date of this notice, appellee's response seven (7) days thereafter. If you submit a summary statement, a copy must be served on the opposing party, otherwise the summary statement cannot be considered by the Kentucky Unemployment Insurance Commission.
For this reason, the Commission routinely does not consider any materials that have not been served to the opposing party. Further, Hudson merely observes that the language of the Commission's final order was very similar to Federal Express's language in the letter of notice. The Commission, however, strongly disputes this analysis. First, the Commission maintains that the facts in the case are so straightforward and the applicable law so established that a certain similarity is to be expected. Second, it observes that no verbatim language from the pertinent letter appears nor any remarkable resemblance is in the language of the letter as compared to the final order. Finally, the Commission emphatically states that it did not use Federal Express's arguments in its decision.
In an administrative proceeding, due process requires that a party receive adequate notice and an opportunity to be heard. Mathews v. Eldridge, 424 U.S. 319, 335, 96 S. Ct. 893, 903, 47 L. Ed. 2d 18 (1976). As correctly explained by the trial court, Hudson was given an opportunity to be heard in a timely and reasonable matter. He elucidated no matter addressed by the Commission that was not also covered at the hearing. The trial court in its review of the due process issue recognized the Commission's regular practice, its assurances that it had not used the arguments in Federal Express's notice, and Hudson's equal opportunity to serve a brief on the Commission. It concluded that the claimant was provided due process.
We concur with the trial court and believe that Hudson's procedural due process was not violated. The Commission's assertions that they did not use the arguments bolstered by their routine practice of not using such material are compelling. In addition, no statute or rule explicitly requires service of the basic notice of appeal on Hudson. Most persuasive, however, is the fact that Hudson was provided notice of the hearing and given an opportunity to be heard. Thus, we agree with the trial court that he was provided due process.
Now, we address Hudson's second argument wherein he contends that the trial court incorrectly determined that substantial evidence existed to support the Commission's finding. Certainly, it cannot be ignored that the hearing itself took place before a referee whose decision differed from the Commission's final decision. The referee determined that the vehicle malfunctioned and that this was the causative factor of the accident. It was this decision that was overruled by the Commission. Subsequently, the trial court affirmed the Commission. Nonetheless, the difference between the referee's decision and the Commission's decision is indicative of the complexity of this case.
Bearing in mind that "[t]he underlying principle of the [legislative] scheme for unemployment compensation [is based on] a humanitarian spirit and it should be so construed[,]" we examine this case. Alliant Health Sys. v. Kentucky Unemployment Ins. Comm'n, 912 S.W.2d 452, 454 (Ky. App. 1995). First, we must determine whether the Commission's "findings of fact [are] supported by substantial evidence[.]" See Thompson, 85 S.W.3d at 624.
Simply put, Hudson maintains that substantial evidence was not provided to support that the accident was his fault or that he did not properly secure the vehicle. The only concession that Hudson makes is that the parking brake was not fully engaged but rather only pulled approximately one-third (1/3) of the way. Further, Hudson highlights that Federal Express has supplied no specific provision stating that an emergency brake must be fully set but only that both parties suggested such practice at the hearing. Another issue proffered by Hudson is that causation for the accident has not been established. He emphasizes that the referee found for him and in doing so, the referee decided that the vehicle malfunctioned rather than Hudson failing to secure it.
Contrary to Hudson's assertions, the Commission maintains that the employer has a policy for its drivers with regard to securing a vehicle when making deliveries. In addition, the Commission states that Federal Express's termination letter discharged Hudson for not properly securing his vehicle. In response to the argument regarding causation, the Commission observes that the employer determined the cause and the Commission found its finding credible. And the purpose of the hearing was not to determine the cause of the accident but to ascertain Hudson's eligibility for unemployment benefits.
As an aside, both parties discuss the fact that Hudson had received two prior letters of warning prior to receiving the third letter of warning, which included his discharge for not properly securing his vehicle. The circuit court also relied on the accident being the third incident in twelve months. Apparently, the prior letters had to do with absenteeism and not with vehicle use. Moreover, during the hearing, when questioned by the referee as to whether Hudson was discharged for receiving three letters of warning in twelve (12) months or for not securing the vehicle, Rod Hamby, Federal Express's operations manager, replied:
I'll have to check my paperwork here and see which one it was exactly. Okay, the warning letter and termination itself, the final warning letter was actually for unacceptable conduct for failing to properly secure his vehicle which resulted in a FedEx Serious DOT Recordable Accident. And that is per our policy, Vehicle Accidents and Occurrences Policy 8-90.
Later, in the hearing, the referee made the following comment:
. . . And I will remind you, we didn't take up any of that issue. I know that the warnings were in the record but strictly that just a warning occurred. We didn't take up the issue of the warning.
Thus, Hudson was discharged for failing to secure his company vehicle according to Federal Express policy, and his receipt of two prior warning letters is not relevant to this scenario.
Returning to the issue at hand, we address the standard for substantial evidence. Substantial evidence is evidence that has sufficient probative value to induce conviction in the minds of reasonable people. Bearing in mind this standard, we conclude that the trial court's acceptance of this evidence as substantial does not constitute clear error. We are a court of review and not of reinterpretation. Therefore, even if our interpretation might be different than the Commission's or the trial court's, that is outside the scope of our review. Hence, in the case at bar, the Commission's and the trial court's findings are supported by substantial evidence.
Statutory language allows for a worker to be disqualified from receiving unemployment benefits for a variety of reasons including discharge from employment for reasons of misconduct connected with the work. Kentucky Revised Statutes (KRS) 341.370(1)(b). Applicable language provides that '"[d]ischarge for misconduct' as used in this section shall include but not be limited to, . . . knowing violation of a reasonable and uniformly enforced rule of an employer[.]" KRS 341.370(6).
Hudson maintains that the Commission, in order to deny him unemployment benefits, was required to make a finding of intentional, willful or wanton conduct. Misconduct has been defined by the Kentucky Courts as "a willful or a wanton disregard of the legitimate business of the employer." Kentucky Unemployment Ins. Comm'n v. King, 657 S.W.2d 250, 251 (Ky. App. 1983). Hudson has misconstrued the law. A reading of the statute mandates no proof of willful or wanton conduct is required when a former employee knowingly violates a uniform company rule. The circuit court correctly concluded that while misconduct may be statutorily interpreted as a willful, wanton or deliberate violation, misconduct also includes a knowing violation of a reasonable company rule.
Hudson relies upon Shamrock Coal Co., Inc. v. Taylor, 697 S.W.2d 952 (Ky. App. 1985), for the proposition that mere negligence does not justify a denial of unemployment benefits. In Shamrock, our Court held the employee's conduct in overturning his bulldozer, a negligent act, standing alone, did not constitute misconduct justifying denial of unemployment benefits. This case is distinguishable from Shamrock. The distinction is between conduct that is negligent or inadvertent, and conduct which is of the employee's own volition. Here, Hudson admits that he did not follow a company policy of which he was aware. See Kentucky Unemployment Ins. Comm'n v. Gooslin, 756 S.W.2d 464, 467 (Ky. 1988).
As noted, substantial evidence was provided by Federal Express that Hudson's actions of only securing the parking brake one-third (1/3) of the way constitutes a "knowing violation of a reasonable and uniformly enforced rule of an employer" and, therefore, supports the decision of the KUIC to not award him unemployment insurance benefits. In addition, Federal Express established that it had a particular policy for correctly parking the vehicle, which included properly securing the emergency brake. Not only did Hudson admit that he did not fully engage the emergency brake but also that he was aware of the policy.
The burden of proving the misconduct of the employee rests with the employer, Shamrock Coal Co., Inc. v. Taylor, 697 S.W.2d 952 at 954. In the instant case, the Commission determined that the employer met this burden. Hence, the decision of the Jefferson Circuit Court affirming the decision of the KUIC, which denied unemployment insurance benefits to Hudson, was not only based on substantial evidence but also not clearly erroneous.
Accordingly, we affirm the February 24, 2011, opinion and order of the Jefferson Circuit Court.
ALL CONCUR. BRIEF FOR APPELLANT: Stephen S. Frockt
BRIEF FOR APPELLEE: Amy F. Howard
Kentucky Unemployment Insurance