Tesla Industries, Inc. v. Unemployment Insurance Appeal Board ( 2021 )

IN THE SUPERIOR COURT OF THE STATE OF DELAWARE
TESLA INDUSTRIES, INC., )
)
Appellant, )
)
v. ) C.A. No.: N20A-09-003 CEB
)
UNEMPLOYMENT INSURANCE )
APPEAL BOARD and DAVID A. )
FLORES, )
)
Appellees. )
ORDER
Submitted: July 7, 2021
Decided: October 7, 2021
Upon Consideration of Tesla Industries, Inc.’s Appeal from a Decision of the
Unemployment Insurance Appeal Board,
AFFIRMED.
Krista E. Shevlin, Esquire, WEBER GALLAGHER SIMPSON STAPELTON
FIRES & NEWBY LLP, New Castle, Delaware. Attorney for Appellant Tesla
Industries, Inc.
Victoria Groff, Esquire, DEPARTMENT OF JUSTICE, Wilmington, Delaware.
Attorney for Appellee Unemployment Insurance Appeal Board.
David A. Flores, No appearance.
BUTLER, R.J.
Appellant Tesla Industries, Inc. (“Employer”) seeks review of a decision by
the Unemployment Insurance Appeal Board (the “Board”)1 that affirmed an appeals
referee’s finding that David A. Flores (“Claimant”)2 is eligible for unemployment
benefits because Employer terminated Claimant without “just cause.” The Court
assumes the parties’ familiarity with this case’s underlying facts and procedural
history and so only recounts the background relevant for affirming the Board’s
decision.
1. Claimant thought Employer had wrongfully denied him a raise. He vented
his concerns to David A. Massiluti, Jr., one of Employer’s managers.
2. An altercation ensued, but its details were disputed. The parties introduced
conflicting stories, requiring the Board to determine which witness had the more
credible account. On the facts described next, the Board picked Claimant.
3. A witness for Employer, Robert Dixon, testified that Claimant approached
Mr. Massiluti in an area Claimant was not permitted to access. According to Mr.
1
Although named as an appellee, the Board has no cognizable interest in defending
its judgment on appeal. See Wilmington Tr. Co. v. Barron, 470 A.2d 257, 261 (Del.
1983). Accordingly, the Board did not participate in merits briefing.
2
Claimant, who proceeded pro se below, has not entered an appearance. As a result,
Claimant did not timely file an answering brief. But see D.I. 5 (Br. Schedule), 10
(Final Delinquent Br. Notice). Nevertheless, the Court may resolve a case in which
a necessary “paper” has not been filed by any means that expeditiously disposes the
case. Del. Super. Ct. Civ. R. 107(f). Using that discretion, and because Employer
has not requested otherwise, the Court deems Employer’s appeal ripe for decision
and issues this Order without the benefit of Claimant’s opposition.
1
Dixon, Claimant expressed his frustration to Mr. Massiluti through screams and
aggressive gestures. Mr. Dixon testified that Mr. Massiluti responded stoically,
calmly advising Claimant to report his grievances to Employer’s executives. Mr.
Dixon did not remember Mr. Massiluti saying anything else.
4. Claimant, however, remembered things differently. Claimant testified that
he routinely accessed the disputed area to retrieve equipment. Once inside, Claimant
said he conveyed his dissatisfaction to Mr. Massiluti without hostility. To the
contrary, in Claimant’s version, Mr. Massiluti escalated matters by repeatedly
threatening to arrange Claimant’s termination. Those threats continued, according
to Claimant, after Claimant had started to leave the scene.
5. Employer later terminated Claimant without a warning or other
intermediate sanction. Claimant’s termination letter did not explain a reason for the
termination. At the hearing, Employer used its handbook to supply the reasoning.
Applying the handbook to the incident, Employer argued Claimant was terminated
for behavior that, in its view, amounted to “fighting”—a handbook term Employer
equated with “sufficiently serious” misconduct that would justify terminating an
employee without warning him beforehand. That characterization enabled
Employer to contend Claimant’s termination was based on “just cause” and so
disqualified him from receiving unemployment benefits.3
3
See generally 19 Del. C. § 3314(2) (2020).
2
6. The Board disagreed. In deciding against Employer, the Board framed its
analysis in witness credibility and factual sufficiency. Through those lenses, the
Board accepted some of Mr. Dixon’s testimony, but found Claimant’s narrative
more believable. For example, the Board was not convinced that whatever happened
was entirely Claimant’s fault. Instead, the Board found Mr. Massiluti instigated an
“increasingly heated discussion” by threatening Claimant.4 Although the Board
thought Claimant behaved “unprofessionally,” it found Employer’s evidence as a
whole failed to raise a “verbal disagreement” to the level of “willful” or “wanton”
misconduct—the gravity generally required to terminate an employee for just cause.5
More specifically, the Board found Employer’s evidence did not show that
Claimant’s conduct was “sufficiently serious” to warrant immediate termination in
lieu of a warning.6 Having weighed the “sufficiency of [Employer’s] evidence,” the
Board concluded Employer’s presentation failed to “tip the balance” in favor of
denying Claimant unemployment benefits.7
7. This appeal followed. Employer argues the Board’s decision is not
supported by the record and rests on a misunderstanding of the law of terminations
and discharge. For the reasons below, the Court affirms.
4
Admin. R. at 13 (Bd. Op.).
5
Id. at 12–13.
6
Id. at 13.
7
Id.
3
8. This Court has jurisdiction to hear appeals from the Board’s decisions.8
Appellate review of an administrative decision is not an opportunity for an
unsuccessful party to relitigate factual issues presented to, and decided by, the
agency.9 That is because “[i]t is within the exclusive purview of the [agency] to
judge witness credibility and resolve conflicts in testimony.”10 Accordingly, the
Court will not entertain line-by-line rebuttals of the evidentiary weight the Board
assigned the facts adduced below.11
9. Absent legal error, the Court defers to the Board’s factual findings and its
application of the law to the facts where supported by substantial evidence.12 The
substantial evidence standard sets a low bar.13 An agency decision is supported by
substantial evidence if it is based on “such relevant evidence as a reasonable mind
might accept as adequate to support a conclusion.”14 Unless the Board’s decision is
8
19 Del. C. § 3344(c)–(d).
9
See Del. Bd. of Med. Licensure & Discipline v. Grossinger, 224 A.3d 939, 959
(Del. 2020) (“On appeal, this Court will not weigh the evidence, determine questions
of credibility, or make its own factual findings.” (internal quotation marks omitted)).
10
Thompson v. Christiana Health Care Sys., 25 A.3d 778, 782 (Del. 2011).
11
See, e.g., Kochis v. Connections CSP, 2021 WL 1712436, at *1 (Del. Super. Ct.
Apr. 30, 2021) (rejecting argument that comprised a “detailed, granular rehash of
the witness’[s] testimony” before the agency).
12
E.g., Grossinger, 224 A.3d at 951, 955 & n.119 (observing that substantial
evidence review attaches to factual questions and mixed questions of law and fact).
13
See, e.g., Biestek v. Berryhill, 139 S. Ct. 1148, 1154 (2019) (“[W]hatever the
meaning of ‘substantial’ in other contexts, the threshold . . . is not high.”).
14
Grossinger, 224 A.3d at 959 (internal quotation marks omitted); see also Boggerty
v. Stewart, 14 A.3d 542, 550 (Del. 2011) (defining substantial evidence as
“adequate” evidentiary support).
4
irrational or legally erroneous, or the Board mischaracterizes or ignores the record,
the Court will defer to the Board’s judgment.15 And in evaluating the record, the
Court accords the prevailing party the benefit of all favorable inferences therefrom.16
10. The employer bears the burden of demonstrating by a preponderance of
the evidence that a termination was based on just cause.17 Under Delaware law, an
employee may be terminated for just cause if an employee commits a willful or
wanton act or pattern of wrongdoing that contravenes the employer’s expectations
or values or the employee’s duties.18 Generally, an employee cannot be terminated
for just cause unless the employee first receives a warning.19 No warning is required,
however, when the employee’s conduct is “sufficiently serious.”20 Whether conduct
is so “extraordinary” as to be sufficiently serious is a factual question for the Board.21
15
See Murphy & Landon, P.A. v. Pernic, 121 A.3d 1215, 1221–24 (Del. 2015); see
also 29 Del. C. § 10142(d) (2020) (“The Court . . . shall take due account of the
experience and specialized competence of the agency . . . . The Court, in the absence
of actual fraud, shall be limited to a determination of whether the agency’s decision
was supported by substantial evidence on the record before the agency.”).
16
Pernic, 121 A.3d at 1221.
17
Id. at 1222.
18
Id.
19
Cf. Moeller v. Wilmington Sav. Fund Soc’y, 723 A.2d 1177, 1179 (Del. 1999) (“If
an employer consistently tolerates willful or wanton misconduct, however, the
employer may be justified in firing employees without first warning them . . . .”).
20
Kids & Teens Pediatrics of Dover v. O’Brien, 2020 WL 6386646, at *2, *4 (Del.
Oct. 30, 2020).
21
Id. at *2.
5
The Board’s application of settled law to the facts is entitled to deference if
supported by substantial evidence.22
11. Substantial evidence supports the Board’s decision. Contrary to
Employer’s contentions, the Board considered all of Employer’s testimonial,
documentary, and photographic evidence, and simply found Claimant had the better
case. In doing so, the Board reviewed the entire record, including the underlying
referee decision and exhibits, and collected and parsed the witnesses’ accounts.
Indeed, Employer does not argue the Board overlooked or mischaracterized the
evidence. Nor could it. The Board credited the testimony and exhibits it found
believable, explained why it discredited those it did not, and resolved internal
conflicts in the evidence in finding Employer failed to prove “sufficiently serious”
misconduct warranting a termination without warning.23 Because the record
supplies “satisfactory proof” for the Board’s conclusion, it must be upheld.24
12. Employer’s fact-intensive arguments do not support reversal. Shorn of
passing references to “legal errors,” Employer merely reargues the evidence the
22
See Grossinger, 224 A.3d at 951, 955 & n.119.
23
See Turbitt v. Blue Hen Lines, Inc., 711 A.2d 1214, 1215 (Del. 1998) (“[W]here
the Board [is] presented with different . . . testimony, [it is] free to reject, in full or
in part, the testimony of one [witness] based on its experience of gauging the
testimony of witnesses who give conflicting testimony.”); Evans v. Tansley, 1988
WL 32033, at *3 (Del. Mar. 29, 1988) (“The credibility of the witnesses, the weight
of their testimony, and the reasonable inferences to be drawn therefrom are for the
[Board] to determine.”).
24
Evans, 1988 WL 32033, at *3.
6
Board deemed deficient and ultimately rejected. Worse, Employer tries to quibble
with the Board’s factual findings and credibility determinations. As explained,
however, a party cannot retry through an administrative appeal the case it lost
below.25 Instead, to prevail, an appellant must, at a minimum, identify findings that
do not qualify as substantial evidence, or gaps or misstatements that undermine the
validity of the Board’s decision. Employer does not do so and none exists.
13. The Board did not commit legal error either. The Board correctly observed
the settled principles of termination law before applying them to Employer’s
evidence. The Board’s application of law to evidence is a fact-laden process the
results of which are given deference if supported by substantial evidence.26 The
question, then, is not whether the Board misconstrued the law. Instead, the question
is whether substantial evidence supports the Board’s finding that Employer failed to
adduce facts sufficient to prove by a preponderance of the evidence that Claimant
acted sufficiently seriously that no pre-termination warning was necessary. For the
reasons explained already, substantial evidence supports that finding. So, even if it
is true, as Employer says, that “an unprovoked outburst and yelling and using
25
See, e.g., Playtex Prods., Inc. v. Leonard, 2002 WL 31814637, at *3 (Del. Super.
Ct. Nov. 14, 2002) (“The Court does not stand as the trier of fact and will not weigh
witness credibility, therefore it cannot substitute its own opinion for that of the
Board’s if there is sufficient evidence to support the Board’s decision . . . .” (citations
omitted)), aff’d, 2003 WL 21107145 (Del. May 12, 2003).
26
See Grossinger, 224 A.3d at 955 & n.119.
7
profanity in the workplace in a [sic] one instance is enough to establish just cause,”27
the Board rationally concluded Employer failed to prove by a preponderance
Claimant’s conduct, in fact, was as Employer describes.28 The Court must defer to
that decision.29
14. As a last resort, Employer insists the Board erred by assessing the evidence
under Employer’s handbook, rather than the just-cause standard. But Employer
misapprehends the Board’s reasoning. Since it did not prove Claimant had been
warned before he was terminated, Employer’s just-cause theory depended on
whether Claimant’s conduct was sufficiently serious to make a warning unnecessary.
So the Board searched for indicia of sufficient seriousness. It did not find any:
“Employer did not present sufficient evidence to convince the [Board] that
Claimant’s conduct rose to the level where he could be terminated for just cause
27
D.I. 6 at 10 (Emp.’s Opening Br.).
28
Admin. R. at 13 (Bd. Op.) (“[Employer] is correct that Delaware law allows for
termination without warning in cases of ‘sufficiently serious’ misconduct. In this
case, however, . . . the Board concludes that Employer did not present sufficient
evidence . . . that Claimant’s conduct rose to [that] level . . . .” (emphasis added)
(citation omitted)).
29
E.g., Olney v. Cooch, 425 A.2d 610, 613 (Del. 1981) (“[A] court will not substitute
its judgment for that of an administrative body where there is substantial evidence
to support the decision and subordinate findings of the agency.”); Mancus v. Merit
Emp. Rels. Bd., 2019 WL 480040, at *4 (Del. Super. Ct. Feb. 1, 2019) (“If the
Board's decision is free from legal error and supported by substantial evidence,
this Court must sustain the Board's decision even if this Court would have decided
the case differently if it had come before it in the first instance.”).
8
without warning.”30 Only after that did the Board, in a footnote, also observe
Employer deviated from its handbook-expressed policy of suspending an employee
before terminating him.31 Although the Board’s footnote might have added insult to
injury, Employer opened the door to the handbook and so it was not irrational or an
abuse of discretion for the Board to use it as further support its findings.32 In any
event, the footnote goes to proof of warning and so was not essential to the Board’s
principal finding, i.e., warning aside, Employer did not prove Claimant engaged in
sufficiently serious misconduct to justify termination.
Substantial evidence supports the Board’s decision. Employer needed to
show otherwise.33 It did not. Accordingly, the Board’s decision is AFFIRMED.
IT IS SO ORDERED.
Charles E. Butler, Resident Judge
30
Admin. R. at 13 (Bd. Op.).
31
Id. at 13 n.19.
32
See Tatman v. Daisy Constr., 2008 WL 1891388, at *5–6 (Del. Super. Ct. Apr.
25, 2008) (rejecting argument on board’s use of record evidence where, among other
things, appellant “raised the . . . matters that he is now complaining about”).
33
See, e.g., Mancus, 2019 WL 480040, at *4 (“The burden of persuasion is on the
party seeking to overturn a decision of the Board to show that the decision was
arbitrary and unreasonable.” (internal quotation marks omitted)).
9