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Valley v. Division of Employment Security

Court of Appeals of Missouri, Western District, Second Division

July 30, 2019


          Appeal from the Labor and Industrial Relations Commission

          Before Lisa White Hardwick, P.J., Thomas H. Newton, and Mark D. Pfeiffer, JJ.

          Thomas H. Newton, Judge.

         Ms. Katherine Valley challenges a divided ruling of the Labor and Industrial Relations Commission reversing the Appeals Tribunal's award of unemployment compensation benefits following her termination from employment for alleged misconduct by the Society of St. Vincent De Paul St. Louis Diocesan Council (employer). She contends that competent and substantial evidence does not support the Commission's ruling. We reverse.

         Ms. Valley began working for the employer in March 2017 as a cost accountant, earning approximately $56, 500 annually. She worked as a liaison between store managers and the employer's office and had been provided a handbook setting forth the employer's policies and rules. In January 2018, Ms. Valley received a 5% raise. The following month, Ms. Debra Downey, Ms. Valley's supervisor, issued Ms. Valley a corrective action form warning that she had not treated co-workers with respect and had created a conflict with co-workers. This warning was based on her reference to the Human Resources director in January 2018 as a "black cloud," which had been overheard in Ms. Valley's conversation with a co-worker.[1] During the appeal hearing before a referee, Ms. Downey testified that this reference violated the non-harassment policy, but this part of the action form shared with Ms. Valley was not checked as a violation. According to Ms. Downey, the conduct constituted bullying as well as harassment on the basis of a protected classification, i.e., that an authority figure was similarly situated to those protected under classifications such as race, color, national origin, disability, religion, marital status, pregnancy, veteran status, sexual orientation, or age.[2]

         The employer conducted Ms. Valley's mid-year review in March 2018, in which a few areas were marked as needing improvement.[3] Still, the employer indicated on the review form that "store managers and assistant managers frequently rely upon [Ms. Valley] to assist with trouble-shooting and problem solving, and she makes a point to be available to them throughout their work day, even after regular office hours." Ms. Valley was cautioned about being "resistant to taking on tasks outside of her role," and informed that colleagues sometime avoided "approaching her to help with projects . . . because they anticipate being met with negativity." Ms. Downey testified that this statement about Ms. Valley's negativity related to her gossipy behavior. Nothing in this evaluation documents Ms. Downey's testimony that Ms. Valley was disruptive in the workplace or gossipy or that she had been subject to frequent complaints and coaching.[4] Ms. Valley testified that the conversation during her mid-year review had focused on how she was overwhelmed because she had been required to take on the work of other employees, and Ms. Downey indicated that Ms. Valley's resistance to helping with other's projects and tasks was discussed during the review. Ms. Valley also testified that this telephone hearing was the first she had heard that multiple people had complained about her on multiple occasions or that she was repeatedly coached about getting into others' personal business. The written record does not contradict Ms. Valley's testimony, and Ms. Downey acknowledged that she did not document every complaint and coaching session, stating "that's not really a good use of my time."

         In June 2018, the employer issued another corrective action form based on an incident involving a new employee whom Ms. Valley allegedly warned about unspecified negative action by the HR director that could occur after her first month. This action form noted a harassment policy violation and again checked boxes for not treating co-workers with respect and creating conflict with co-workers. In the form's narrative, Ms. Downey stated, "The conversation is in direct violation of Section 1-5 of the Employee Handbook, and creates a hostile work environment by creating an intentional office division, and by the discomfort that it caused for the receptionist in her office position."[5] As to this corrective action, Ms. Downey testified that the new employee "felt as though she was being targeted" and it was "an incredibly, um, kind of a-aggressive conversation that had been had." She also testified that this was her own "spin" on the incident.[6] Ms. Downey linked the June 2018 incident to the January 2018 incident involving the HR director and reiterated that the non-harassment policy, that is, Section 1-5 of the handbook, applied to this director. She did not indicate whether or in what protected class the receptionist could be included.

         The incident giving rise to Ms. Valley's termination in August 2018 involved her query to the marketing director about the employer's policy regarding terminated employees not receiving a vacation payout. The corrective action form checked the violation boxes pertaining to treating co-workers with respect and creating conflict with co-workers. According to Ms. Downey, Ms. Valley's query was motivated by concerns she had when she learned in a text message from a terminated employee that he had not received a vacation payout. Ms. Valley did not mention him by name to the marketing director nor did anyone other than Ms. Downey testify that Ms. Valley had discussed this former employee's circumstances with other co-workers. Ms. Downey testified that she believed Ms. Valley was behind workplace "buzz" about the former employee because Ms. Valley had communicated with the marketing director about the policy when "there was a rumor going around the office that this former employee did not get his vacation payout; it was not fair." Ms. Downey admitted that no one had come to her to state that Ms. Valley discussed the circumstances of the employee's termination with them nor did this appear in the email from Ms. Valley to the marketing director.[7] The narrative on the form called Ms. Valley's query "a follow-up to an in-person conversation about what the Leadership Team discusses in its meetings and whether or not they were aware of policies enforced by another director [i.e., the HR director] that were inconsistent with our mission." Ms. Downey characterized the behavior as Ms. Valley trying to "stir the pot" and to "create a hostile work environment between various co-workers." She further wrote, "Finally, and most concerning, is that you appear to have inserted yourself into the details of another employee's termination." Ms. Valley testified that she was not a member of the Leadership Team, had never had a conversation about it, and was unaware of any policy that prevented her from asking a director about a workplace policy. Ms. Downey testified that she did not know whether Ms. Valley had released any confidential information to the marketing director when asking about the vacation payout policy. Nevertheless, Ms. Downey maintained that Ms. Valley violated a confidentiality policy that applied to "organization finances, pricing, products and new product development, software and computer programs, marketing strategies, supplies, customers and potential customers, and knowledge, skills and abilities of personnel." Ms. Downey testified that discussing a terminated employee's circumstances fit within the catch-all "not limited to" phrase accompanying this list. Ms. Downey also indicated that questions about a workplace policy such as a vacation payout should have been directed to the HR director.

         Ms. Valley applied for unemployment compensation benefits, and a Division of Employment Security deputy denied them, finding that she had been terminated for misconduct. According to the deputy's determination, "[t]he claimant was discharged because she was discussing the details of a former employee's discharge with co-workers. This is a violation of the employer's confidentiality policy." Ms. Valley filed an appeal, and a telephone hearing was conducted by an Appeals Tribunal referee in November and December 2018. Stating that the employer's testimony was not credible "because the employer did not present any testimony from a witness with first-hand knowledge of the events," and that the employer did not meet its burden of proving misconduct, the Appeals Tribunal reversed the deputy's determination and awarded Ms. Valley unemployment compensation.

         The employer appealed to the Commission, which reversed in a 2-1 decision. The Commission determined that the employer had met its burden, citing subsections 288.030.1(23) (a) & (e), which address that particular misconduct involving a knowing disregard of an employer's interests, knowing violation of expected standards, and violations of known employer rules. The Commission concluded as follows:

Employer established misconduct in this matter. Employer specifically warned claimant about the expectations and policies to treat coworkers with respect and not to start conflict in the workplace. However, claimant continued to violate employer's policies and act in knowing disregard of employer's interests and expected standards.

         Ms. Valley timely filed this appeal in the Eastern District, and it was transferred here because she does not reside in Missouri. § 288.210.[8]

         Legal Analysis

         In the first point, Ms. Valley claims that the Commission erred in finding that she had committed misconduct in connection with work as defined under the Missouri Employment Security Law, § 288.030.1(23)(e), because "the competent and substantial evidence demonstrated only that [Ms.] Valley had inquired about the application of the vacation pay-out policy and [t]he [employer] has no rule that prohibited [Ms.] Valley from making this inquiry."[9]

         Our review of a Commission decision is delimited under section 288.210, which provides that its findings "as to the facts, if supported by competent and substantial evidence and in the absence of fraud, shall be conclusive." Still, "[t]he Commission may not arbitrarily ignore relevant evidence not shown to be disbelieved or noncredible." Geiler v. Mo. Labor & Indus. Relations Comm'n, 924 S.W.2d 606, 609 (Mo. App. E.D. 1996). We may set the decision aside on specified grounds including "[t]hat there was no sufficient competent evidence in the record to warrant the making of the award." § 288.210(4). "When an administrative agency makes factual determinations that affect private rights . . . the Missouri Constitution guarantees greater judicial scrutiny" than we accord to a sufficiency review following a bench or jury trial. Seck v. Dep't of Transp., 434 S.W.3d 74, 79 (Mo. banc 2014).

Article V, section 18, guarantees the right of judicial review and requires that agency findings be supported by competent and substantial evidence upon the whole record. As a result, a court reviewing factual findings by an administrative agency must consider all of the evidence that was before the agency and all of the reasonable inferences that may be drawn from that evidence, including the evidence and inferences that the agency rejected in making its findings.
Even though the constitution requires courts to give greater scrutiny to administrative fact findings than it does to facts found by a jury or judge, it does not authorize a reviewing court to substitute its judgment for that of [the] administrative agency being reviewed. Section 288.210 reinforces this point, . . .

Id. at 79 (citations omitted); see also Miller v. Help At Home, Inc., 186 S.W.3d 801, 805 (Mo. App. W.D. 2006) ("A factual determination by the Commission will be disturbed on appeal, on the basis that it is against the weight of the evidence, only when there is a firm belief that the judgment is wrong."). While we defer to the Commission as to witness credibility and the weight given to testimony, we do "not view the evidence and all reasonable inferences drawn therefrom in the light most favorable to the award." Fendler v. Hudson Servs., 370 S.W.3d 585, 588 (Mo. banc 2012) (citations omitted). We review questions of law de novo, and "whether the Commission's findings support the conclusion that a claimant engaged in misconduct connected with his or her work is a question of law." Id. at 588-89 (citations omitted).

         "[W]hen the employer claims that the applicant was discharged for misconduct, the burden shifts to the employer to prove misconduct connected to work . . . by a preponderance of the evidence." Id. at 589 (citations omitted). We distinguish between conduct that justifies termination and misconduct that precludes benefits because "[m]isconduct, in this context, is to be construed least favorably to a forfeiture of benefits." Scott v. Div. of Emp't Sec., 377 S.W.3d 603, 606 (Mo. App. W.D. 2012) (citation omitted); see also Walker v. Div. of Emp't Sec., 333 S.W.3d 517, 520 (Mo. App. W.D. 2011) ("[A]pplying the relevant statutory provisions, we are mindful that the purpose of Missouri's unemployment compensation act is to provide benefits to persons who are unemployed through no fault of their own." (citation omitted)). Further, "the employer must establish that the employee's actions were not simply the result of poor workmanship, lack of judgment, or an inability to do the job." Walker, 333 S.W.3d at 520 (citation omitted).

         The Commission based its conclusion on a number of facts that it found credible, but our review of the record does not find competent and substantial evidence to support many of these findings, which are set forth below.

• Employer discharged claimant on August 28, 2018, because claimant repeatedly treated her coworkers with disrespect and created conflict in the workplace in violation of employer's policies.

         The employer's witness struggled to point to specific workplace policies purportedly violated by Ms. Valley's conduct and repeatedly asserted that the behavior was included in the "not limited to" parts of the rules in the employee handbook addressing harassment on the basis of protected status, and general standards of conduct. The Commission's use of the term "repeatedly," if intended to indicate conduct beyond the incidents subject to formal corrective action, is not supported by evidence other than Ms. Downey's telephone hearing testimony, which focused on unspecified gossipy and disruptive behavior that Ms. Downey did not personally observe or document.

• Employer gave claimant written warnings, or corrective actions, on February 7, 2018[, ] and June 27, 2018[, ] for treating coworkers with disrespect, such as referring to the human resources director as a "black cloud," and creating conflict in the workplace by telling a new employee that the human resources director would "turn on her" after her first month.

         To the extent that the Commission's use of "such as" could connote that these were just two of many incidents, we note that these were the only incidents before August 2018 subject to formal corrective action and thus documented in the record. Any implication that other purported misconduct occurred is unsupported by any evidence other than Ms. Downey's testimony, which was inconsistent, contradicted by the ...

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