S.F. v. Review Board of the Indiana Department of Workforce Development Federal Express Corporation (mem. dec.)

MEMORANDUM DECISION
Pursuant to Ind. Appellate Rule 65(D),
this Memorandum Decision shall not be FILED
regarded as precedent or cited before any Nov 13 2020, 10:43 am
court except for the purpose of establishing CLERK
the defense of res judicata, collateral Indiana Supreme Court
Court of Appeals
estoppel, or the law of the case. and Tax Court
ATTORNEY FOR APPELLANT ATTORNEYS FOR APPELLEE
Sheila M. Sullivan INDIANA DEPARTMENT OF
Flynn & Sullivan PC WORKFORCE DEVELOPMENT
Indianapolis, Indiana Curtis T. Hill, Jr.
Attorney General
Frances Barrow
Deputy Attorney General
Indianapolis, Indiana
IN THE
COURT OF APPEALS OF INDIANA
S.F., November 13, 2020
Appellant, Court of Appeals Case No.
20A-EX-996
v. Appeal from the Review Board of
the Department of Workforce
Review Board of the Indiana Development
Department of Workforce The Honorable Larry A. Dailey,
Development; Chairperson
Federal Express Corporation, The Honorable Heather D.
Appellees Cummings, Member
Review Board No.
20-R-0369
Vaidik, Judge.
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Case Summary
[1] S.F. appeals the decision of the Review Board of the Indiana Department of
Workforce Development affirming the decision of the Administrative Law
Judge (“ALJ”) that he was discharged for just cause and therefore not entitled
to unemployment benefits. We reverse and remand.
Facts and Procedural History
[2] S.F. worked as a manager at FedEx from April 15, 1996, to July 6, 2019. He
was discharged on July 6, 2019, because he received “three letters of
deficiencies within a 12 month period.” Ex. p. 94.
[3] S.F. filed for unemployment benefits, and a claims investigator with the
Department of Workforce Development found S.F. “was discharged due to a
violation of [FedEx’s] policy. [However,] [i]nformation available establishes the
policy was not uniformly enforced.” Id. at 4; see Ind. Code § 22-4-15-1(d)(2).
The claims investigator concluded S.F. was not discharged for just cause and
therefore entitled to unemployment benefits.
[4] FedEx appealed, and a hearing was held before an ALJ in October 2019. At the
hearing, Linda Mallender, Senior Manager of Internal Operations at FedEx,
testified about FedEx’s progressive-discipline policy. Although FedEx didn’t
introduce the written policy into evidence, Mallender testified it consists of
these six steps: (1) verbal counseling; (2) written counseling; (3) letter of
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concern; (4) warning letter;1 (5) performance reminder;2 and (6) termination.
According to Mallender, an employee is discharged if they receive three
performance reminders or any combination of three warning letters and
performance reminders in twelve months.3 Mallender testified S.F. was
discharged because he received three letters in twelve months: (1) a warning
letter on April 11, 2019; (2) a performance reminder on June 15; and (3) a
warning letter on June 19.
[5] S.F. testified about the circumstances of each letter and why he didn’t think the
letters were justified. He also testified FedEx doesn’t discharge “everybody”
who receives three letters in twelve months. Tr. p. 28. S.F. said he knew a
manager, C.L., who received “three letters” in twelve months but was allowed
to “step down” to an hourly position. Id. S.F. testified if C.L. hadn’t stepped
down, he would’ve been discharged. Id. at 29. S.F. said after he received his
second letter, he asked Mallender if he could step down, but she said he didn’t
need to do so because he would be “fine.” Id. at 28.
[6] Mallender took the stand again and disputed S.F.’s testimony that he asked her
about stepping down:
1
A warning letter is for “unacceptable conduct.” Tr. p. 12.
2
A performance reminder is for “not performing their job.” Id.
3
However, Mallender testified an employee can be terminated for receiving just one warning letter
“depending on the severity . . . of the infraction.” Id. at 21.
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[A]t no time did [S.F.] come and ask me if he could step down,
because had he had done that, then I would’ve gone back to
H.R., and my Director, and talked to them.
Id. at 32. Although Mallender didn’t know “why [C.L.] received his letters, or
what they were about,” she acknowledged C.L. was still employed at FedEx
and didn’t otherwise dispute S.F.’s claim that managers may step down to an
hourly position after receiving three letters in twelve months. Id.
[7] On October 29, the ALJ issued a decision reversing the claims investigator’s
award of unemployment benefits. Ex. pp. 53-56. S.F. appealed this decision to
the Review Board, and the Review Board, for reasons not relevant here,
remanded the case for the ALJ to “rewrite her decision” and hold a hearing if
necessary. Id. at 61.
[8] The ALJ conducted a second hearing in February 2020. S.F. appeared by
counsel. Because S.F. was now represented by counsel, FedEx declined to
participate. See Tr. pp. 36-41. S.F. testified that just because an employee
receives three letters in twelve months doesn’t mean they are “automatically”
discharged. Id. at 44. S.F. again discussed C.L., who was “going to be let go,
[but FedEx] allowed him to step down into an hourly job.” Id. S.F. said other
managers were allowed to step down, but he couldn’t remember their names.
Id. During closing statement, S.F.’s attorney argued FedEx’s policy that an
employee is discharged after receiving three letters in twelve months was not
uniformly enforced because FedEx allowed managers to step down to an hourly
position after receiving three letters in twelve months. Id. at 54.
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[9] On February 21, the ALJ again issued a decision reversing the claims
investigator’s award of unemployment benefits. Specifically, the ALJ found that
“[a]ll employees who had received three letters of deficiencies within a 12
month period have been discharged.” Ex. p. 92. The ALJ then concluded
FedEx “uniformly enforced the policy,” S.F. knowingly violated the policy
because he received three letters in twelve months, each letter was justified, and
therefore S.F. was discharged for just cause. Id. at 93.
[10] S.F. appealed the ALJ’s decision to the Review Board, which adopted the
ALJ’s findings and conclusions and affirmed the ALJ. Appellant’s App. Vol. II
p. 32.
[11] S.F. now appeals.
Discussion and Decision
[12] The Indiana Unemployment Compensation Act provides that any decision of
the Review Board is conclusive and binding as to all questions of fact. Ind.
Code § 22-4-17-12(a). Review Board decisions may be challenged as contrary to
law, in which case we examine the sufficiency of the facts found to sustain the
decision and the sufficiency of the evidence to sustain the findings of facts. I.C.
§ 22-4-17-12(f). Under this standard, we review (1) findings of basic fact to
ensure “substantial evidence” supports those findings, (2) conclusions of law for
correctness, and (3) inferences or conclusions from basic facts, often called
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“mixed questions of law and fact,” for reasonableness. Q.D.-A., Inc. v. Ind. Dep’t
of Workforce Dev., 114 N.E.3d 840, 845 (Ind. 2019).
[13] S.F. contends “[t]he record does not support the [Review] Board’s decision that
[he] was discharged for just cause.” Appellant’s Br. p. 11. A claimant
discharged from employment for just cause is ineligible for unemployment
benefits. I.C. § 22-4-15-1(a). “Discharge for just cause” includes a “knowing
violation of a reasonable and uniformly enforced rule of an employer, including
a rule regarding attendance.” Id. at (d)(2). Subsection (d)(2) applies if
substantial evidence establishes that (1) there was a rule; (2) the rule was
reasonable; (3) the rule was uniformly enforced; (4) the claimant knew of the
rule; and (5) the claimant knowingly violated the rule. Co. v. Review Bd. of Ind.
Dep’t of Workforce Dev., 58 N.E.3d 175, 178 (Ind. Ct. App. 2016). “[A]n
employer’s asserted work rule must be reduced to writing and introduced into
evidence to enable this court to fairly and reasonably review the determination
that an employee was discharged for ‘just cause’” under subsection (d)(2). Reed
v. Review Bd. of Ind. Dep’t of Workforce Dev., 32 N.E.3d 814, 823 (Ind. Ct. App.
2015).
[14] S.F. makes two arguments on appeal. First, he argues FedEx’s progressive-
discipline policy wasn’t uniformly enforced because other managers were
allowed to step down to an hourly position after receiving three letters in twelve
months. Second, he argues that even if the policy was uniformly enforced, he
didn’t “knowingly violate” it because his three letters weren’t justified.
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Appellant’s Br. p. 13. Because we find the first issue dispositive, we don’t
address the second.
[15] The reason for requiring uniform enforcement of a rule is to (1) give notice to
employees about what punishment they can reasonably anticipate if they violate
the rule and (2) protect employees against arbitrary enforcement. Coleman, 905
N.E.2d at 1020. A uniformly enforced rule is carried out so all persons under
the same conditions and in the same circumstances are treated alike. Reed, 32
N.E.3d 814, 823 (Ind. Ct. App. 2015).
[16] We first note it’s difficult for us to say what FedEx’s progressive-discipline
policy states. This is because FedEx didn’t introduce its written policy into
evidence at the hearing. In addition, FedEx didn’t participate in the second
hearing, when S.F. gave additional testimony about FedEx’s policy.4 Had
FedEx participated, perhaps the record would be clearer on this point. In any
event, S.F. claims the ALJ’s finding that “[a]ll employees who had received
three letters of deficiencies within a 12 month period have been discharged” is
not supported by substantial evidence. He highlights that other managers,
including C.L., were allowed to step down to an hourly position after receiving
three letters in twelve months. At the first hearing, Mallender didn’t dispute
S.F.’s testimony that C.L. had been allowed to step down; rather, she claimed
S.F. didn’t ask her. But as S.F. points out on appeal, Mallender’s testimony that
4
FedEx also has not filed a brief in this case.
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S.F. didn’t ask her is “further evidence that such an exception to the rule
existed.” Appellant’s Reply Br. p. 5. And S.F. testified at the second hearing
that more managers had been allowed to step down, and FedEx wasn’t present
to dispute this claim. We agree with S.F. that substantial evidence doesn’t
support the ALJ’s finding that “all” employees who receive three letters in
twelve months are discharged, which is the basis of the ALJ’s conclusion that
FedEx uniformly enforced its policy. Accordingly, the record lacks substantial
evidence that S.F. was discharged for just cause. We reverse the Review
Board’s denial of unemployment benefits and remand for further proceedings.
[17] Reversed and remanded.
Bailey, J., and Weissmann, J., concur.
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