Stepsaver, Inc. v. Department of Workforce Services , 741 Utah Adv. Rep. 33 ( 2013 )

2013 UT App 207_________________________________________________________
THE UTAH COURT OF APPEALS
STEPSAVER, INC.,
Petitioner,
v.
DEPARTMENT OF WORKFORCE SERVICES, WORKFORCE APPEALS
BOARD AND RUSSELL TALBOT,
Respondents.
Opinion
No. 20120149‐CA
Filed August 22, 2013
Original Proceeding in this Court
Robert J. Poulsen and Joseph M. Skousen,
Attorneys for Petitioner
Suzan Pixton, Attorney for Respondent
Department of Workforce Services, Workforce
Appeals Board
JUDGE GREGORY K. ORME authored this Opinion, in which
JUDGES CAROLYN B. MCHUGH and MICHELE M. CHRISTIANSEN
concurred.
ORME, Judge:
¶1 Stepsaver, Inc. petitions for review of the Workforce
Appeals Board’s decision affirming the award of unemployment
benefits to Russell Talbot. Stepsaver argues that the Board erred in
determining that Stepsaver offered no legally competent evidence
to support its claim that Talbot was terminated for just cause. We
agree with Stepsaver, set the Board’s decision aside, and instruct
the Board to reevaluate Stepsaver’s contentions.
BACKGROUND
¶2 Talbot began working for Stepsaver as a route delivery
driver in February 2009 and was terminated in October 2011.
Stepsaver v. Department of Workforce Services
Stepsaver’s company policy made clear that an employee would be
terminated if he or she was the subject of three driving‐related
complaints. During his employment, Talbot was the subject of
three such complaints. After each of the first two complaints,
Talbot was given a written performance review, which he signed,
acknowledging both the complaint and that he would be
terminated if further incidents occurred.
¶3 The first write‐up involved a woman complaining that
Talbot cut her off in traffic and was driving so erratically that she
was concerned for her safety and for that of the children in her car.
The second write‐up involved a customer’s employee claiming that
Talbot sped through their parking lot while talking on a cell phone.
Both speeding and cell phone use are violations of Stepsaver’s
driving policy. The final incident involved a man reporting that
Talbot was driving erratically on Bangerter Highway with a cell
phone to his ear. When confronted by management, Talbot claimed
that he had not been near Bangerter Highway during the time
alleged, was not talking on his cell phone, and was not going more
than 63 miles per hour. Stepsaver checked its GPS monitoring
system, which revealed that Talbot had traveled in excess of 65
miles per hour and that he had indeed been on Bangerter Highway
at the time of the alleged incident. A Stepsaver manager then spoke
directly to the man who complained and determined that Talbot
was untruthful in his denial. Talbot was terminated shortly
thereafter and subsequently applied for unemployment benefits.
Stepsaver filed a response citing “[u]nsafe driving and customer
complaints” as its reasons for terminating Talbot.1
1. Talbot was also reprimanded during his time as an employee for
becoming confrontational and “using the ‘F’ word” with a
customer’s employees and for being on his cell phone when he
should have been interacting with customers. Again, with each of
these incidents, Talbot signed a document acknowledging the
complaints and the fact that he could be terminated if his
performance did not improve. However, these complaints were not
(continued...)
20120149‐CA 2 2013 UT App 207Stepsaver v. Department of Workforce Services
¶4 The Utah Department of Workforce Services (DWS)
determined that Talbot was terminated for just cause. He appealed
and was granted a hearing before an Administrative Law Judge
(the ALJ). Presented at the hearing as exhibits were Talbot’s signed
performance review documents; forms related to the
unemployment claim and appeal, including responses from Talbot
and Stepsaver as well as notes taken by DWS employees who had
talked to both parties; and an email between two Stepsaver
employees regarding the third driving complaint that immediately
preceded Talbot’s termination. The ALJ also heard testimony from
both Talbot and the manager. Other Stepsaver managers and
employees were available by phone to testify, but the ALJ
determined that their testimony would be repetitive.
¶5 Talbot testified that the first person who complained was
tailing him closely and seemed upset that he was not going fast
enough. He said that he was on his hands‐free device rather than
a cell phone at the time of the second incident and that he could not
have been speeding because it would have been impossible to
accelerate so quickly between the gated entrance and the end of the
customer’s parking lot. Talbot also testified that the customer’s
employee later acknowledged he may not have been going as fast
as she first reported. As to the final incident, Talbot testified that he
had not been driving unsafely and that he used his hands‐free
device on that day as well. He explained that he had not
deliberately lied to his managers about his location but had
believed that he had not been in the Bangerter Highway area at the
time alleged.
¶6 The manager testified that Stepsaver employees other than
himself had taken the initial phone calls regarding all three
incidents. However, he testified that he spoke directly with the
man who called regarding the third incident in order to get further
clarification. The manager also testified that while Stepsaver
1. (...continued)
part of the identified reason for Talbot’s termination and do not
warrant further discussion in this opinion.
20120149‐CA 3 2013 UT App 207Stepsaver v. Department of Workforce Services
received a call from the customer in the second incident confirming
that Talbot had not been going as fast as was originally reported,
the customer maintained that Talbot had been on a cell phone.
When asked why Talbot was terminated, the manager answered,
“[D]riving habits mainly—driving habits and company policy.”
The ALJ specifically asked whether Stepsaver had a safe driving
policy in place and, if so, how that policy addressed driving
complaints. The manager confirmed that Stepsaver did in fact have
a policy in place and explained, “Typically, . . . for the first time
around, . . . they’re warned about it. The second time around
they’re suspended for two days. And the third time around they’re
terminated.”
¶7 The ALJ determined that Talbot was terminated without just
cause because Stepsaver had provided only hearsay evidence to
establish that Talbot had actually committed the driving violations
in question. The Board affirmed the ALJ’s decision. The Board
determined that Talbot was discharged for “unsafe driving and
using his cell phone while driving” but agreed with the ALJ that
Stepsaver only offered hearsay evidence while Talbot offered
firsthand evidence in denying any wrongdoing. Ruling that none
of the evidence adduced by Stepsaver qualified under any
exception to the hearsay rule, the Board determined that Stepsaver
had failed to provide any legally competent evidence to show that
Talbot committed the driving violations of which he was accused
and therefore had failed to demonstrate Talbot’s culpability—one
of the requirements for establishing that a termination was for just
cause. Stepsaver seeks judicial review of the Board’s decision.
ISSUE AND STANDARD OF REVIEW
¶8 Stepsaver argues that the Board erred in determining that
Stepsaver failed to offer evidence other than inadmissible hearsay
in support of its decision to terminate Talbot. “The determination
of whether evidence constitutes hearsay is a question of law that
we review for correctness.” Prosper, Inc. v. Department of Workforce
Servs. (Prosper I), 2007 UT App 281, ¶ 8, 168 P.3d 344.
20120149‐CA 4 2013 UT App 207Stepsaver v. Department of Workforce Services
ANALYSIS
¶9 In order to claim unemployment benefits, an employee must
have been terminated without just cause. Utah Code Ann. § 35A‐4‐
405(2)(a) (LexisNexis Supp. 2013);2 Utah Admin. Code R994‐405‐
201. See Prosper I, 2007 UT App 281, ¶ 9. The employer bears the
burden of proving that a termination is supported by just cause.
Bhatia v. Department of Emp’t Sec., 834 P.2d 574, 577 (Utah Ct. App.
1992). To establish just cause, an employer must show (1) that the
claimant was culpable, (2) that the claimant had knowledge of the
conduct expected of him, and (3) that the conduct leading to
termination was within the control of the claimant. Id. The Board
concluded that Stepsaver failed to establish culpability on Talbot’s
part and consequently did not reach the merits on the second or
third requirements for just cause.
¶10 For purposes of “just cause” analysis, culpability is defined
as conduct “so serious that continuing the employment
relationship would jeopardize the employer’s rightful interest.”
Utah Admin. Code R994‐405‐202(1). When proving culpability, an
employer may introduce hearsay evidence. See Prosper I, 2007 UT
App 281, ¶ 10; Utah Admin. Code R994‐508‐109(9). However,
“findings of fact must be supported by a residuum of legally
competent evidence, and therefore cannot be based solely on
inadmissible hearsay.” Prosper I, 2007 UT App 281, ¶ 11 (emphasis
added).
¶11 The validity of the Board’s determination that Stepsaver
failed to introduce any legally competent evidence to demonstrate
Talbot’s culpability turns on properly identifying the reasons for
which Talbot was fired. The Board argues that Stepsaver fired
Talbot only for actual driving violations, including talking on a cell
phone while driving. If this were true, the Board might have been
correct in determining that only inadmissible hearsay evidence was
2. Because the statutory provisions in effect at the relevant time do
not differ materially from the statutory provisions now in effect, we
cite the current version of the Utah Code as a convenience to the
reader.
20120149‐CA 5 2013 UT App 207Stepsaver v. Department of Workforce Services
introduced by Stepsaver. No firsthand accounts were offered at the
hearing before the ALJ by witnesses who actually saw Talbot using
a cell phone while driving or otherwise driving unsafely. The only
evidence offered were reports of complaints made to Stepsaver by
various individuals. However, we conclude that both the ALJ and
the Board failed to accurately focus on a predominant reason for
Talbot’s termination—multiple customer complaints, albeit
complaints related to Talbot’s driving.
¶12 On the form filed in response to Talbot’s unemployment
claim, Stepsaver clearly stated that Talbot was fired for “[u]nsafe
driving and customer complaints.” (Emphasis added.) Stepsaver
went on to explain that Talbot had “been written up previously for
[the] same type of complaints and told [that] any future
occurrences would result in immediate termination.” Additionally,
Stepsaver stated that it had been harmed by the complaints about
Talbot due to the “potential loss of customers and possible
accident[s] due to unsafe driving.” At the hearing before the ALJ,
the manager testified that Talbot was discharged for “driving
habits and company policy,” and he explained that company policy
called for an employee to be terminated upon the occurrence of
three customer complaints related to driving. When asked why
driving complaints are so detrimental to Stepsaver’s business
interests, the manager explained, “[W]e drive mobile billboards,
you know, . . . our vehicles stick out like a sore thumb.” He
emphasized that because the company’s image is vital to its
success, it is important that people perceive Stepsaver as having
“good looking equipment, good looking people,” and employees
that drive in a “safe manner.”
¶13 Our analysis in Prosper I, where we considered a similar set
of facts, is instructive. There, a manager provided a spreadsheet
that documented the customer complaints made against an
employee. 2007 UT App 281, ¶ 5. The Board determined that no
firsthand evidence of the claimant’s performance had been offered
and therefore concluded that culpability had not been established.
Id. ¶ 6. We reversed, determining that the evidence was not
hearsay because the employer offered evidence of complaints “not
to establish the truth of any particular complaint, but simply to
20120149‐CA 6 2013 UT App 207Stepsaver v. Department of Workforce Services
show she was the object of numerous customer complaints and
thus an employee who did not perform satisfactorily,” id. ¶ 13, i.e.,
to the satisfaction of the business’s customers, regardless of
whether her performance was satisfactory in some absolute sense.
¶14 We conclude that, in light of all the evidence, Stepsaver fired
Talbot not only because the company was concerned about his
driving habits but also because of the complaints Stepsaver
received regarding Talbot, which Stepsaver concluded were having
a negative impact on it. See id. Indeed, that was Stepsaver’s position
at the administrative stage when the claims were first raised, as
shown by the documents it filed, as well as through the testimony
it offered before the ALJ, as supplemented by its exhibits. Talbot
was fired because multiple complaints were made against him and
not, as the Board now contends, purely because of his unsafe
driving and cell phone use.
¶15 When viewed correctly, none of Stepsaver’s key evidence
presents a hearsay problem because it was “not introduced for the
truth of the matter asserted—i.e., that the customer complaints
were true—but simply to prove that the complaints had been
made,” see id., and that Talbot was therefore subject to termination
under Stepsaver’s customer complaint policy. While properly
regarded as hearsay had they been offered to prove the truth of the
matters asserted, the manager’s testimony, the signed performance
reviews, and other evidence regarding customer and public
complaints are not inadmissible hearsay, if hearsay at all, because
their primary purpose was to show that several complaints were
made and not that the substance of each complaint was true. The
fact that the ALJ disallowed testimony from other Stepsaver
managers and employees regarding the complaints because the
testimony would have been repetitive supports our conclusion. We
can only assume that the ALJ denied the other managers and
employees the opportunity to testify because the ALJ already had
sufficient evidence and testimony before him to determine that the
complaints had actually been made.3
3. The Board argues that the position we adopt might subject
(continued...)
20120149‐CA 7 2013 UT App 207Stepsaver v. Department of Workforce Services
¶16 This case, therefore, comes down to the very narrow
question of whether the number of complaints Stepsaver received
about Talbot during the year‐and‐a‐half that he was employed by
Stepsaver might establish Talbot’s culpability. We conclude that it
might, indeed. Stepsaver’s policy regarding driving‐related
customer complaints was clear: on the third complaint, an
employee would be terminated. Stepsaver followed its policy, with
Talbot’s acknowledgment as evidenced by his signed performance
reviews. Although we previously upheld a determination by the
Board that employee culpability cannot be established by the mere
existence of complaints alone, see Prosper, Inc. v. Department of
Workforce Servs. (Prosper II), 2008 UT App 250, ¶ 7, 193 P.3d 1061,
our conclusion here rests upon Stepsaver’s three‐complaint
dismissal policy, the existence of the requisite three complaints,
and especially Talbot’s signed performance reviews indicating his
understanding that subsequent complaints would result in his
immediate termination.
¶17 Further, the number of complaints made against Talbot is
telling and supportive of a determination of culpability when
compared with the number of complaints received by the company
about other Stepsaver employees. The manager testified that any
complaint, let alone three in such a short period of time, was
extremely uncommon. He stated, “[I]t’s concerning mainly due to
the fact that, number one, we very, very, very seldom get any type
of complaint.” The company was justifiably concerned about the
damage that customer dissatisfaction and complaints from
members of the public could have on its reputation, and it
terminated Talbot consistent with its policy regarding the
maximum number of complaints the company deemed tolerable.
3. (...continued)
employees to termination over contrived complaints from vengeful
ex‐spouses or a disgruntled co‐worker. However, there is no
evidence here of falsified complaints, and employers need the
flexibility to make decisions on the basis of seemingly reliable
information absent evidence of actual—as opposed to wholly
speculative—contrivance.
20120149‐CA 8 2013 UT App 207Stepsaver v. Department of Workforce Services
¶18 We conclude that the Board erred in determining that the
evidence adduced by Stepsaver was inadmissible hearsay in the
context of the multiple complaints against Talbot as a ground for
his termination. It follows that the Board erred in concluding that
Stepsaver failed to meet its burden of demonstrating culpability by
reason of the residuum rule. See Prosper I, 2007 UT App 281, ¶ 11.
The evidence before us establishes the existence of repeated
complaints against Talbot, the seriousness of these complaints, the
potential harm that the complaints might cause to Stepsaver, and
the plausibility of Stepsaver’s position that it needed to terminate
its relationship with Talbot to protect its business interests. See
Utah Admin. Code R994‐405‐202(1).
CONCLUSION
¶19 We conclude that the Board erred in determining that
Stepsaver offered no legally competent evidence in support of its
contention that Talbot was culpable. The Board never reached the
other two requirements for establishing just cause given its
conclusion that Stepsaver failed to establish culpability. We set the
Board’s decision aside and direct the Board to reevaluate whether
Stepsaver satisfied the culpability requirement in view of the
foregoing analysis and, if the Board concludes that Stepsaver did,
for the Board to consider whether the elements of knowledge and
control have been satisfied as well, see Bhatia v. Department of Emp’t
Sec., 834 P.2d 574, 577 (Utah Ct. App. 1992), and for the entry of
such order as may then be appropriate. In our discretion, we grant
costs of the appeal to Stepsaver.4 See Utah R. App. P. 34(b).
4. Contrary to Stepsaver’s suggestion, an award of costs under rule
34(b) of the Utah Rules of Appellate Procedure does not include
attorney fees. See Utah R. App. P. 34(b).
20120149‐CA 9 2013 UT App 207