v. Department of Corrections , 2019 COA 10 ( 2019 )

The summaries of the Colorado Court of Appeals published opinions
constitute no part of the opinion of the division but have been prepared by
the division for the convenience of the reader. The summaries may not be
cited or relied upon as they are not the official language of the division.
Any discrepancy between the language in the summary and in the opinion
should be resolved in favor of the language in the opinion.
SUMMARY
January 24, 2019
2019COA10
No. 17CA1992, Stiles v. Department of Corrections, Denver
Reception & Diagnostic Center — Government — State
Personnel System Act — Disciplinary Proceedings
In this Colorado State Personnel Board case, a division of the
court of appeals considers the appropriate standard of review an
Administrative Law Judge should employ during an evidentiary
hearing under section 24-50-125(4), C.R.S. 2018 to decide whether
an appointing authority acted arbitrarily and capriciously in
disciplining a state-certified employee. Consistent with Dep’t of
Instits., Div. for Developmental Disabilities, Wheat Ridge Reg’l Ctr. v.
Kinchen, 886 P.2d 700, 705 (Colo. 1994), the division holds that a
section 24-50-125(4) hearing is a de novo hearing at which the
Administrative Law Judge makes credibility, factual, and legal
findings without deference to the appointing authority.
COLORADO COURT OF APPEALS 2019COA10
Court of Appeals No. 17CA1992
State Personnel Board Case No. 2016B034
Mathew Mark Stiles,
Petitioner-Appellee,
v.
Department of Corrections, Denver Reception & Diagnostic Center,
Respondent-Appellant,
and
State Personnel Board,
Appellee.
ORDER AFFIRMED
Division VI
Opinion by JUDGE FREYRE
Furman and Dunn, JJ., concur
OPINION PREVIOUSLY ANNOUNCED AS “NOT PUBLISHED PURSUANT TO
C.A.R. 35(e)” ON December 6, 2018, IS NOW DESIGNATED FOR PUBLICATION
Announced January 24, 2019
Greg D. Rawlings P.C., Greg D. Rawlings, Denver, Colorado, for Complainant-
Appellee
Philip J. Weiser, Attorney General, Katherine Aidala, Assistant Attorney
General, Denver, Colorado, for Respondent-Appellant
Philip J. Weiser, Attorney General, Leanne B. De Vos, Senior Assistant Attorney
General, Billy Seiber, First Assistant Attorney General, Denver, Colorado, for
Appellee
¶1 The Department of Corrections, Denver Reception and
Diagnostic Center (DOC), appeals the order of the Colorado State
Personnel Board (Board) reinstating appellee, Mathew Mark Stiles,
because his termination from DOC was arbitrary and capricious.
For the reasons described below, we affirm the Board’s order.
I. Background
¶2 DOC hired Stiles as a part-time correctional officer in August
2010. In December 2010, Stiles became a full-time employee, and,
in 2011, he achieved state-certified status. In 2013, DOC
transferred Stiles to a boiler room position in the facility. Every
performance evaluation since Stiles’ hiring date rated him as a
competent employee, and Stiles never received any corrective or
disciplinary actions during his employment.
¶3 Beginning in 2015, Stiles experienced several unexpected and
stressful events in his personal life, including an admitted affair by
his wife, his teenage daughter’s diagnosis of and emergency
hospitalization for schizophrenia, and disputes with his daughter’s
birth mother concerning his daughter’s condition. Stiles sought
professional help through the Colorado State Employee Assistance
Program. Stiles’ personal challenges never adversely affected his
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job performance. But the related stress of these challenges caused
Stiles to experience bouts of insomnia.
¶4 Following an emotional counseling session with his wife and
an argument with his daughter’s birth mother on Friday, September
25, 2015, Stiles was unable to sleep. To alleviate his insomnia,
Stiles smoked some marijuana around midnight. On Monday
morning (September 28), Stiles returned to work and was randomly
selected for drug testing. He complied with the testing, and, the
next day, he submitted a confidential incident report to DOC
admitting his marijuana use and explaining the extenuating
circumstances that led to it. On October 2, DOC received the test
results, which revealed a positive result for THC, the main
psychoactive chemical in marijuana.
¶5 On October 13, Stiles received a hand-delivered Notice of Rule
6-10 Meeting.1 The notice, dated October 9, was signed by the
appointing authority, Warden David Johnson, and informed Stiles
1A Rule 6-10 meeting “is not a formal hearing but rather an
opportunity for the parties to exchange information. The appointing
authority must consider any written or oral information that the
employee provides before making a final decision.” Dep’t of Insts.,
Div. for Developmental Disabilities, Wheat Ridge Reg’l Ctr. v.
Kinchen, 886 P.2d 700, 705 (Colo. 1994) (citation omitted).
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of an upcoming Rule 6-10 meeting concerning his continued
employment in light of the test result. On October 19, Stiles met
with Warden Johnson and provided an explanation for the positive
test result. He was accompanied and supported by his immediate
supervisor, Lieutenant James DeTello, who confirmed that Stiles
was a valuable employee. On that same date, Lieutenant DeTello
submitted Stiles’ final performance review, which provided an
overall rating of Level II (meets expectations) and a Communications
and Interpersonal Skills rating of Level III (exceptional).
¶6 On November 2, Warden Johnson issued a notice of
disciplinary action immediately terminating Stiles. Stiles appealed
his termination to the Board. An Administrative Law Judge (ALJ)
conducted a hearing and issued an initial decision. That decision
rescinded Stiles’ termination, modified the discipline to a ten
percent pay reduction for six months, and ordered back pay and
benefits. In reaching his decision, the ALJ found that Warden
Johnson’s decision was arbitrary, capricious, and contrary to rule
or law. In particular, the ALJ found that Warden Johnson (1) failed
to candidly and honestly consider all of the evidence he procured,
as required by Department of Personnel & Administration Board
3
Rule 6-9, 4 Code Colo. Regs. 801-1, particularly Stiles’ lack of prior
disciplinary history and his extenuating mitigating circumstances;
and (2) imposed discipline that was not within the range of
reasonable alternatives by failing to consider the disciplinary
alternatives set forth in the DOC regulation directed at marijuana
use, DOC Admin. Reg. 1450-36(IV)(A)(1). On review, the Board
adopted the ALJ’s initial decision, and this appeal followed.
¶7 DOC contends that the ALJ employed an incorrect standard of
review and improperly reweighed the evidence when he reviewed
Warden Johnson’s disciplinary action. DOC argues that the ALJ
was required to defer to Warden Johnson’s findings and that such
deference supports Stiles’ termination. We are not persuaded, for
three reasons. First, the Rule 6-10 meeting is informal and does
not sufficiently protect the property interests of a state-certified
employee accused of misconduct. Second, section 24-50-125(4),
C.R.S. 2018, provides for an adversarial proceeding at which the
employee is entitled to representation by counsel of choice, and it
requires the Board to make written findings of fact and conclusions
of law — a hearing our supreme court has described as de novo.
Finally, under the standard of review that binds this court, section
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24-4-106(7), C.R.S. 2018, we conclude that the ALJ’s decision is
supported by the record.
II. The Board’s Appellate Process
¶8 “The state personnel system is established by Article XII,
sections 13, 14, and 15, of the Colorado Constitution and is
legislatively refined by” Title 24, Article 50 of the Colorado Revised
Statutes. Dep’t of Insts., Div. for Developmental Disabilities, Wheat
Ridge Reg’l Ctr. v. Kinchen, 886 P.2d 700, 705 (Colo. 1994). One of
its central features is that “persons within the system can be
subjected to discharge or other discipline only for just cause.” Id.The Constitution creates the Board and authorizes it to adopt rules
to implement it. Colo. Const. art. XII.
¶9 The legislature has enacted a statute that enforces these
constitutional standards by requiring that (1) an appointing
authority notify the employee of the discipline, § 24-50-125(2); (2)
the employee be provided a hearing before the Board if requested,
§ 24-50-125(3); (3) the employee be afforded the right to legal
representation at the hearing, § 24-50-125(4); and (4) the Board
make findings of fact and conclusions of law affirming, modifying,
or reversing the appointing authority’s discipline, id.
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¶ 10 Finally, the Board has prescribed rules that elaborate on the
disciplinary procedures set forth in the statute. See Dep’t of Pers. &
Admin. Ch 6, 4 Code Colo. Regs. 801-1; Dep’t of Pers. & Admin. Ch
8, 4 Code Colo. Regs. 801-1. These rules permit an appointing
authority to discipline a certified employee for failing to comply with
efficient service or competence, for willful misconduct, or for an
inability to perform assigned duties. Dep’t of Pers. & Admin. Board
Rule 6-12, 4 Code Colo. Regs. 801-1. They require an appointing
authority to meet with the employee before taking disciplinary
action. Dep’t of Pers. & Admin. Board Rule 6-10, 4 Code Colo.
Regs. 801-1. The appointing authority must inform the employee of
the alleged misconduct and allow the employee to respond in this
meeting. Id.
¶ 11 In deciding whether to discipline a certified employee, the
appointing authority must take into consideration certain criteria
set forth in Rule 6-9:
The decision to take corrective or
disciplinary action shall be based on the
nature, extent, seriousness, and effect of
the act, the error or omission, type and
frequency of previous unsatisfactory
behavior or acts, prior corrective or
disciplinary actions, period of time since a
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prior offense, previous performance
evaluations, and mitigating circumstances.
Information presented by the employee
must also be considered.
Dep’t of Pers. & Admin. Board Rule 6-9, 4 Code Colo. Regs. 801-1.
If discipline occurs, the employee must be notified of the decision
and the right to appeal the decision to the Board within ten days of
receipt of notice. § 24-50-125(3); Dep’t of Pers. & Admin. Board
Rule 6-15, 4 Code Colo. Regs. 801-1; Dep’t of Pers. & Admin. Board
Rule 8-8, 4 Code Colo. Regs. 801-1.
¶ 12 An ALJ may conduct the hearing on behalf of the Board.
§ 24-50-103(7), C.R.S. 2018. The ALJ must make written findings
of fact and conclusions of law and render an initial decision
affirming, modifying, or reversing the disciplinary action. §§ 24-50-
125(4), -125.4(3), C.R.S. 2018; Colo. Dep’t of Human Servs. v.
Maggard, 248 P.3d 708, 712 (Colo. 2011). Either party may appeal
the ALJ’s initial decision by petitioning the Board to modify the
decision. § 24-50-125.4(4); Kinchen, 886 P.2d at 706. On review,
the Board must accept the ALJ’s findings of historical fact unless
they are contrary to the weight of the evidence. § 24-4-105(15)(b),
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C.R.S. 2018. The Board’s decision is reviewable in this court. § 24-
50-125.4(3); Kinchen, 886 P.2d at 706.
A. Standard of Review
¶ 13 We review the decision of an administrative agency for an
abuse of discretion. Lawley v. Dep’t of Higher Educ., 36 P.3d 1239,
1247 (Colo. 2001). We will reverse a Board’s decision only if we find
that the Board acted arbitrarily and capriciously, made a decision
that is unsupported by the record, erroneously interpreted the law,
or exceeded its authority. Rice v. Auraria Higher Educ. Ctr., 131
P.3d 1096, 1100 (Colo. App. 2005) (citing § 24-4-106(7)). We must
sustain the Board’s decision “if it has a reasonable basis in law and
is supported by substantial evidence in the record considered as a
whole.” Farny v. Bd. of Equalization, 985 P.2d 106, 109 (Colo. App.
1999). Substantial evidence is “the quantum of probative evidence
that a fact finder would accept as adequate to support a conclusion,
without regard to the existence of conflicting evidence.” Black
Diamond Fund, LLLP v. Joseph, 211 P.3d 727, 730 (Colo. App.
2009). All reasonable doubts about the correctness of the Board’s
ruling must be resolved in its favor. Lawley, 36 P.3d at 1252.
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B. The ALJ Employed the Correct Standard of Review
¶ 14 The issue before us is whether, as DOC contends, the ALJ
must defer to the appointing authority’s weighing of the Rule 6-9
factors or whether, as Stiles contends, the hearing before the ALJ is
de novo and requires no deference to the appointing authority’s
Rule 6-9 findings. DOC correctly asserts that Rule 6-9 provides no
guidance on how an appointing authority should weigh the factors.
And it reasons that this absence implies that an ALJ should defer to
the appointing authority’s findings because permitting the ALJ to
reweigh the factors would “read into the rule a requirement that
does not exist.” See Beruman v. Dep’t of Human Servs., 2012 COA
73, ¶ 26. We disagree and find more persuasive and binding our
supreme court’s analysis of section 24-50-125 and its conclusion
that only a de novo hearing can properly protect a certified
employee’s property interests. Kinchen, 886 P.2d at 707; People v.
Gladney, 250 P.3d 762, 768 n.3 (Colo. App. 2010) (this court is
bound by supreme court precedent).
¶ 15 In Kinchen, our supreme court held that the appointing
authority bears the burden of proof in disciplinary hearings before
the Board. 886 P.2d at 710. In doing so, it recognized that the
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Colorado Constitution provides state-certified employees with a
property interest in their employment and that such employees can
only be discharged for just cause based on constitutionally specified
criteria. Id. at 707. In analyzing disciplinary procedures, the court
noted that the Board has prescribed rules requiring the appointing
authority to notify and meet with the employee before taking
disciplinary action. Of importance here, the court said, “[t]his
meeting is not a formal hearing but rather an opportunity for the
parties to exchange information.” Id. at 705.
¶ 16 The supreme court further explained that the forum in which
a certified employee’s property interest is properly protected is the
section 24-50-125 hearing before the Board. Id. at 707. Indeed,
unlike the procedures leading up to the imposition of disciplinary
action, which are informal and afford little protection to an
employee accused of misconduct, the Board hearing ensures that a
certified employee is discharged “only for just cause based on
constitutionally specified criteria.” Id. And the court found this
was a de novo hearing where “the scales are not weighted in any
way by the appointing authority’s initial decision to discipline.” Id.
at 706. We view this language as dispositive and in conflict with
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DOC’s deference argument. Moreover, if the Board were required to
defer to the appointing authority, “there would be little check on the
constitutional sufficiency of an appointing authority’s standards in
imposing discipline.” Id. at 707. Accordingly, we hold that an ALJ
is not bound by the appointing authority’s initial decision and need
not defer to it. Instead, the ALJ conducts a de novo review of the
appointing authority’s decision, weighs the evidence presented, and
must make findings of historical fact and ultimate conclusions of
fact based on that evidence.
¶ 17 Because rulings and rationale necessary to reach conclusions
on the issues presented are binding law, we are not convinced that
we may depart from the language of Kinchen based on DOC’s
argument that this language constitutes nonbinding dicta. Super
Valu Stores, Inc. v. Dist. Court, 906 P.2d 72, 78-79 (Colo. 1995)
(“Conclusions of an appellate court on issues presented to it as well
as rulings logically necessary to sustain such conclusions become
the law of the case.”); Hardesty v. Pino, 222 P.3d 336, 340 (Colo.
App. 2009) (“A holding and its necessary rationale . . . are not
dicta.”). The cited language provided the rationale of the court’s
holding that the appointing authority bears the burden of proof at
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the Board hearing. And, the court expressly held that the hearing
before the Board is de novo. See Kinchen, 886 P.2d at 706 n.10
(“We hold . . . that the hearing before the Personnel Board is de
novo.”).
C. The ALJ Properly Applied the Standard of Review
¶ 18 DOC next contends that the ALJ misapplied the arbitrary and
capricious standard in modifying Warden Johnson’s decision. We
disagree.
¶ 19 Section 24-50-103(6) authorizes an ALJ to overturn an
appointing authority’s actions only if it finds that those actions were
arbitrary, capricious, or contrary to rule or law. Lawley, 36 P.3d at
1251-52. An appointing authority acts arbitrarily or capriciously in
one of three ways:
(a) By neglecting or refusing to use reasonable
diligence and care to procure such evidence
as it is by law authorized to consider in
exercising the discretion vested in it.
(b) By failing to give candid and honest
consideration of evidence before it on which
it is authorized to act in exercising its
discretion.
(c) By exercising its discretion in such
manner after a consideration of evidence
before it as clearly to indicate that its action
12
is based on conclusions from the evidence
such that reasonable men fairly and
honestly considering the evidence must
reach contrary conclusions.
Id. at 1252 (quoting Van DeVegt v. Bd. of Cty. Comm’rs, 98 Colo.
161, 166, 55 P.2d 703, 705 (1936)).
¶ 20 The ALJ determined that Warden Johnson used reasonable
diligence to procure evidence and appropriately conducted the Rule
6-10 meeting. But, he found that Warden Johnson violated Rule 6-
9 by failing to properly weigh the mitigating evidence and the
absence of any prior discipline. The ALJ noted Stiles’ “mistake” in
consuming marijuana one time, Stiles’ “solid performance” record,
Stiles’ “absence of any prior corrective action,” Stiles’ “documented
desire to improve his job,” and Stiles’ “dedication to his job.”
Because the ALJ was free to weigh these facts and because these
evidentiary facts are well supported by the record, we may not set
them aside. Lawley, 36 P.3d at 1245; Kinchen 886 P.2d at 706.
¶ 21 As well, the ALJ found that Warden Johnson violated Rule 6-9
by imposing the most severe form of discipline for Stiles’
misconduct. While the ALJ agreed that Stiles’ marijuana use was
serious (as reflected in the six month, ten percent pay reduction),
13
he found that it was not so egregious as to warrant termination
because this was a one-time bad decision, the effects of the
marijuana wore off well before Stiles returned to work, and no
evidence was presented that this one-time use ever affected Stiles’
job performance. The ALJ also cited DOC’s marijuana consumption
regulation, DOC Admin. Reg. 1450-36(IV)(A)(1), and found that its
violation could result in any type of corrective action and “need not
result in the severest form of disciplinary action.” Because these
findings of evidentiary fact are supported by the record, we affirm
the Board’s order adopting the ALJ’s initial decision.
¶ 22 Last, we reject DOC’s argument that the ALJ was required to
make findings under all three factors of the three-part test for
arbitrary and capricious action, and that the third factor
(reasonable men would reach a different conclusion) somehow acts
as a check on the other two factors and therefore requires deference
by the ALJ. DOC cites no authority for this argument and we
conclude that supreme court authority contradicts it. See Lawley,
36 P.3d at 1252 (upholding Board’s decision that university failed to
give candid and honest consideration to evidence before it (second
factor)); Kinchen, 866 P.2d 706 n.10 (requiring the ALJ to make “an
14
independent finding of whether the evidence presented justifies a
dismissal for cause”). Accordingly, because the ALJ’s decision and
the Board’s order adopting it are supported by the record, we affirm
the Board’s order.
III. Conclusion
¶ 23 The order is affirmed.
JUDGE FURMAN and JUDGE DUNN concur.
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