Stacy Jordan v. Employment Appeal Board

IN THE COURT OF APPEALS OF IOWA
No. 13-1380
Filed October 29, 2014
STACY JORDAN,
Petitioner-Appellant,
vs.
EMPLOYMENT APPEAL BOARD,
Respondent-Appellee.
________________________________________________________________
Appeal from the Iowa District Court for Wapello County, Lucy J. Gamon,
Judge.
A former employee appeals from the district court’s decision on judicial
review affirming the Employment Appeal Board’s denial of unemployment
benefits. AFFIRMED.
John S. Allen of the Clinical Law Programs of the University of Iowa
College of Law, and Calvin Dane, Andy Giller, and Aja Oyegunle, Student Legal
Interns, Iowa City, for appellant.
Rick Autry of the Employment Appeal Board, Des Moines, for appellee.
Heard by Danilson, C.J., and Doyle and Tabor, JJ.
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DOYLE, J.
Stacy Jordan appeals the district court’s denial of her petition for judicial
review, which sought to reverse the decision of the Employment Appeal Board
(EAB) denying her unemployment benefits. Jordan asserts on appeal the district
court erred in affirming the EAB’s decision because the agency failed to prove
she was discharged for misconduct and the administrative law judge failed to
explain the basis for her factual findings. Because we find specific credibility
determinations were not required to be set out in the agency’s ruling and
substantial evidence supports its decision, we affirm the district court’s ruling.
I. Scope and Standards of Review.
It must first be noted that our review of final agency action is “severely
circumscribed.” Greenwood Manor v. Iowa Dep’t of Pub. Health, 641 N.W.2d
823, 839 (Iowa 2002); Sellers v. Emp’t Appeal Bd., 531 N.W.2d 645, 646 (Iowa
Ct. App. 1995). Nearly all disputes are won or lost at the agency level; the
cardinal rule of administrative law is that judgment calls are within the province of
the administrative tribunal, not the courts. See id.
Iowa Code section 17A.19(10) (2013) governs judicial review of an
administrative decision. NextEra Energy Res. LLC v. Iowa Utils. Bd., 815
N.W.2d 30, 36 (Iowa 2012). If the agency action prejudiced the petitioner’s
substantial rights, and the action meets one of the criteria listed in section
17A.19(10), the district court may grant relief. Evercom Sys., Inc. v. Iowa Utils.
Bd., 805 N.W.2d 758, 762 (Iowa 2011). We apply the standards set forth in
section 17A.19(10) to determine whether our conclusion matches the district
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court’s result. Id.; City of Des Moines v. Emp’t Appeal Bd., 722 N.W.2d 183, 189
(Iowa 2006).
Our standard of review depends upon the petitioner’s challenge to the
agency’s decision. Burton v. Hilltop Care Ctr., 813 N.W.2d 250, 256 (Iowa 2012).
If the agency is clearly vested with the authority to make fact-findings on an
issue, then we may disturb those findings on judicial review only if they are
unsupported by substantial evidence when reviewing the record as a whole. Id.
“Substantial evidence” is “the quantity and quality of evidence that would be
deemed sufficient by a neutral, detached, and reasonable person, to establish
the fact at issue when the consequences resulting from the establishment of that
fact are understood to be serious and of great importance.” Iowa Code
§ 17A.19(10)(f)(1). We judge the agency’s findings in light of the relevant
evidence on record that may detract from or support it. Id. § 17A.19(10)(f)(3).
Even if the evidence on record could lead a reasonable fact finder to a different
conclusion, we are not called to decide if the record supports a different finding;
rather, our review is limited to determining whether the record supports the
finding actually made by the agency. IBP, Inc. v. Al-Gharib, 604 N.W.2d 621,
632 (Iowa 2000). “Accordingly, the district court and the appellate court should
not consider the evidence insubstantial merely because the court may draw
different conclusions from the record.” Gits Mfg. Co. v. Frank, ___ N.W.2d ___,
___, 2014 WL 5286513, at *2 (Iowa 2014).
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II. Background Facts and Proceedings.
Tenco Industries, Inc. provides services to persons with disabilities,
including assisted-living residential housing. Petitioner Stacy Jordan began
working for Tenco in 1998 as a residential instructor.
On March 8, 2012, Jordan was given a “counseling statement,” a written
statement that Tenco considered the equivalent of a verbal warning. The
statement indicated Jordan had committed three violations: “Inappropriate
Behavior,” “Rudeness to Individuals/Parents/Guardians, etc.,” and
“Insubordination.” The statement described various instances and behaviors on
Jordan’s part that her supervisors deemed unacceptable, including that while
Jordan’s client logs had noted she was having problems with a client, Jordan did
not “approach[] the coordinators about this problem[]” to try to “remedy the
situation.” The statement laid out changes Jordan was to make, and it noted she
would be assigned to work in a different house. The statement further
specified: “Possible consequences: If [Jordan’s] behavior continues it will result in
more disciplinary action which could mean termination.” Jordan signed the
statement on March 8, acknowledging she had “read and underst[ood] this
Counseling Statement” and that she also understood her “signature verified that
the issues were addressed.”
Jordan’s work location was changed to a different Tenco residential house
“with the hopes that . . . the change in staff would help ease the combativeness
of the [other] one.” However, about two weeks later, Jordan received a second
written counseling statement. Four violations occurring March 21 were indicated
on the statement: “Unsatisfactory Performance,” “Violation of Company Policies
5
& Procedures,” “Rudeness to Individuals/Parents/Guardians, etc.,” and “Failure
to Follow Instructions.” The statement referenced staff reports that Jordan had
failed to follow Tenco’s policies concerning writing incident reports, for which she
was previously counseled. The statement also included a report that Jordan had
refused to help a client “clean up himself who had soiled himself and that she
then had a ‘negative’ attitude toward him.” As a result, Tenco suspended Jordan
for one day without pay, and the statement specified that “[a]ny further infractions
could lead to termination.” Jordan refused to sign the statement, explaining in
writing that she felt she had “not been rude to any of [the] individuals [she]
care[d] for” and that she had “performed [her] job’s responsibilities to the best of
[her] abilities.”
Two weeks later, it was reported Jordan had left a client in soiled
undergarments “for over an hour” and, “[w]hen asked about changing him,
[Jordan] stated, ‘I will just wait for his shower because I don’t want to clean him
up twice.’” It was also reported Jordan would tell that same client to return to his
room “anytime the individual would come out of his room.” A third written
counseling statement for these violations was issued to Jordan on April 6, 2012,
stating “[t]hese behaviors are both neglecting an individual’s care and restricting
his rights” and that “[a]s of today, [Jordan’s] employment at Tenco is terminated.”
Jordan sought unemployment benefits, and in May 2012, Iowa Workforce
Development issued its decision finding Jordan was eligible to receive benefits.
Tenco appealed, asserting Jordan’s employment was terminated for misconduct
and her request for benefits should be denied.
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Hearings in June and August were held before an administrative law judge
(ALJ). There, two witnesses for Tenco testified, essentially repeating the
reasons stated in the written statements as the basis of Tenco’s finding of
misconduct on the part of Jordan and its termination of her employment. Jordan
testified and defended her conduct, testifying she felt she had handled herself
appropriately based upon how she had been previously trained and Tenco’s
policies. She also denied ever stating she was leaving the client in soiled
undergarments because she did not want to clean him up twice and that she
made the client stay in his room. Finally, Jordan argued Tenco failed to follow its
own policies for investigating claims of abuse or neglect and in terminating her
employment.
In response to Jordan’s testimony, Tenco’s employee witness testified that
Jordan’s leaving the client in soiled undergarments “was not viewed necessarily
as abuse but as . . . denial of [the client’s] right to be treated with dignity.”
Tenco’s employee witness admitted Tenco had not done an investigation of the
final incident, but she testified the client was non-verbal, so the client could not
give her a statement. She testified she had obtained a written statement from
the worker training with Jordan that night. Though the statement was not
admitted into evidence, the employer’s witness read the statement, dated April 4,
2012, into the record:
[Jordan left the client in] a messy Depends for an hour before his
shower, wouldn't let him go to his room, said he would take his
clothes off. After his shower told him to go to bed around 8:00 or
8:30 p.m. He would come out and she told him to go back to bed.
The witness testified that according to Tenco’s policies, leaving a client
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in a messy Depends is not treating them with dignity. Also the
individuals have the right to move about freely in their home. They
are to be as independent as possible to live in their homes so
restricting him to his room was not allowing him his right to move
about freely in his home.
The witness admitted the trainee’s written statement did not include Jordan’s
statement she was not cleaning up the client twice. Jordan denied the witness’s
claims.
On August 29, 2012, the ALJ issued its ruling finding in favor of Tenco.
The ALJ essentially found Tenco’s witnesses more credible than Jordan, finding
truthful all of the reported accusations in the three counseling statements, but for
the one claim Tenco itself found was false. The ALJ specifically found that,
under “[Tenco’s] policy, and basic human decency, [Jordan’s] actions failed to
treat the client with dignity and respect.” Based upon these factual findings, the
ALJ found that Jordan
was warned about her behaviors, but it appears she disregarded
those warnings. Her treatment of the client April 3, 2012, was
unacceptable, inappropriate, and unprofessional. Consequently,
the [ALJ] concludes [Jordan’s] conduct demonstrated a willful
disregard of the standards of behavior the employer has the right to
expect of employees and shows an intentional and substantial
disregard of the employer’s interests and the employee’s duties and
obligations to the employer. The employer has met its burden of
proving disqualifying job misconduct. . . . Therefore, benefits are
denied.
Jordan appealed the decision of the ALJ to the EAB, and the EAB affirmed
the ALJ’s decision, adopting the ALJ’s factual finding and legal conclusions as its
own. Jordan’s request for a rehearing was denied.
Jordan filed a petition for judicial review of the EAB’s decision in January
2013. She asserted the EAB’s decision was not supported by substantial
8
evidence because Tenco failed to establish misconduct. She asserted Tenco’s
failure to specify rules and policies she allegedly violated and to submit
supporting documentation of its allegations fell short of the statutory definition of
misconduct, viewing the record as a whole.
Following arguments on her petition, the district court entered its ruling
affirming the EAB’s decision. The court found Tenco’s hearsay evidence was
admissible and “indicia of its reliability was found through the record.” The court
noted that although “Jordan’s testimony contradicted [the] statement, she did not
object to its admissibility at the time, nor did she cross examine the employer
concerning this statement.” The court found the hearsay statement was “not the
sort of allegation an employer would be likely to make lightly” and the
“believability of the hearsay statement is further enhanced by reason of
[Jordan’s] prior conduct in the weeks leading up to her termination.” The court
ultimately concluded the hearsay statement met the “necessary levels of
trustworthiness, credibility, and accuracy,” allowing the ALJ to rely upon it in
making its decision. Additionally, the court found the ALJ was not required to
make specific credibility findings in its ruling, and the ALJ essentially finding
Jordan’s testimony was not credible did not warrant a finding that substantial
evidence did not support the EAB’s decision.
Jordan now appeals, arguing the district court erred in affirming the EAB.
She asserts the same issues raised before the district court, challenging the
ALJ’s reliance on the hearsay statement and the ALJ’s lack of specific credibility
findings. We address her arguments in turn.
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III. Discussion.
A. Credibility.
We start with Jordan’s argument that the district court erred in finding the
agency was not required to specifically set forth its credibility findings. As noted
by Jordan, Iowa Code section 17A.16(1) provides that the agency “decision shall
include an explanation of why the relevant evidence in the record supports each
material finding of fact.”
This duty on the part of the agency is intended to allow a reviewing
court “to ascertain effectively whether or not the presiding officer
actually did seriously consider the evidence contrary to a finding,
and exactly why that officer deemed the contrary evidence
insufficient to overcome the evidence in the record supporting that
finding.” Arthur E. Bonfield, Amendments to Iowa Administrative
Procedure Act, Report on Selected Provisions to Iowa State Bar
Association and Iowa State Government 42 rptr. cmt. (1998) . . . ;
accord Catalfo v. Firestone Tire & Rubber Co., 213 N.W.2d 506,
510 (Iowa 1973) (“[The commissioner’s] decision must be
sufficiently detailed to show the path he has taken through
conflicting evidence. When he disregards uncontroverted expert
medical evidence he must say why he has done so.”); see also
Tussing v. George A. Hormel & Co., 417 N.W.2d 457, 458 (Iowa
1988) (finding commissioner’s failure to state any reasons for
rejecting overwhelming evidence, including medical evidence, that
work-related injury occurred on date in question required reversal).
Schutjer v. Algona Manor Care Ctr., 780 N.W.2d 549, 560 (Iowa 2010). This
duty is not intended to be a burdensome one, and the fact-finder is not required
“to discuss each and every fact in the record and explain why or why not [he or
she] has rejected it.” Id. The fact-finder’s decision need only be “sufficiently
detailed to show the path he has taken through conflicting evidence.” Id.
Here, two different stories were presented at the hearing as to what
occurred, and the ALJ was required to determine which story it found most
credible. There is no question the ALJ, and subsequently, the EAB, did not
10
express the step-by-step reasoning process that led them to the conclusion that
Tenco’s witnesses were more credible than Jordan, but the decisions of the ALJ
and EAB, the ultimate fact-finders here by law, found Tenco’s version to be more
credible. We must therefore agree with the district court that the lack of a
specific statement concerning the agency’s credibility determination was not a
fatal flaw in its determination that sufficient evidence supported the agency’s
decision.
B. Misconduct and Hearsay.
Turning to the agency’s finding of misconduct, as we have noted above,
our review of the agency’s factual findings is circumscribed by statute. See Iowa
Code § 17A.19(10)(f); Greenwood Manor, 641 N.W.2d at 839; Sellers, 531
N.W.2d at 646. If an agency has been clearly vested with the authority to make
factual findings on a particular issue, then a reviewing court can only disturb
those factual findings if they are “not supported by substantial evidence in the
record before the court when that record is reviewed as a whole.” Iowa Code
§ 17A.19(10)(f); Burton, 813 N.W.2d at 256. This review is limited to the findings
that were actually made by the agency and not other findings the agency could
have made. Meyer v. IBP, Inc., 710 N.W.2d 213, 218 (Iowa 2006).
Iowa Code section 96.5(2)(a) provides that if it found the ex-worker “has
been discharged for misconduct in connection with the individual’s
employment . . . [t]he individual shall be disqualified for benefits . . . .” The Iowa
Administrative Code defines misconduct as follows:
“Misconduct” is defined as a deliberate act or omission by a
worker which constitutes a material breach of the duties and
obligations arising out of such worker’s contract of employment.
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Misconduct as the term is used in the disqualification provision as
being limited to conduct evincing such willful or wanton disregard of
an employer’s interest as is found in deliberate violation or
disregard of standards of behavior which the employer has the right
to expect of employees, or in carelessness or negligence of such
degree of recurrence as to manifest equal culpability, wrongful
intent or evil design, or to show an intentional and substantial
disregard of the employer’s interests or of the employee’s duties
and obligations to the employer. On the other hand mere
inefficiency, unsatisfactory conduct, failure in good performance as
the result of inability or incapacity, inadvertencies or ordinary
negligence in isolated instances, or good faith errors in judgment or
discretion are not to be deemed misconduct within the meaning of
the statute.
Iowa Admin. Code r. 871-24.32(1)(a).
Jordan challenges the hearsay statement read into the record by Tenco’s
witness and accepted as fact by the ALJ and EAB. Ordinarily, where the “record
is composed solely of hearsay evidence, a reviewing court will examine the
evidence closely in light of the entire record to see whether it rises to the
necessary levels of trustworthiness, credibility and accuracy required by
reasonably prudent persons in the conduct of their serious affairs.” Schmitz v.
Iowa Dep’t of Human Servs., 461 N.W.2d 603, 607-08 (Iowa Ct. App. 1990); see
also Iowa Code § 17A.14(1) (“A finding shall be based upon the kind of evidence
on which reasonably prudent persons are accustomed to rely for the conduct of
their serious affairs, and may be based upon such evidence even if it would be
inadmissible in a jury trial.”); Clarke v. Iowa Dep’t of Revenue & Fin., 644 N.W.2d
310, 320 (Iowa 2002) (holding that hearsay evidence is admissible and may
constitute substantial evidence for an ALJ’s opinion); Gaskey v. Iowa Dep’t of
Transp., 537 N.W.2d 695, 698 (Iowa 1995) (“[H]earsay evidence is admissible at
administrative hearings and may constitute ‘substantial evidence.’”). However,
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where no objection to the hearsay evidence was made before the ALJ, the
objection to the evidence is waived. Christiansen v. Iowa Bd. of Educ. Exam’rs,
831 N.W.2d 179, 192 (Iowa 2013).
Here, the ALJ found Jordan had done what Tenco’s employees said she
had done. Moreover, the ALJ factually found Jordan’s actions violated Tenco’s
policies. These determinations were for the agency to make. The district court
concluded “that the [EAB]’s application of the law to the facts of this case was
justified. Substantial evidence in the record shows that [Jordan] mistreated a
nonverbal client of her employer. The [EAB] reasonably found that [Jordan] had
engaged in ‘misconduct’ such that she was disqualified from receiving
unemployment benefits.” We agree. Consequently, we affirm the district court’s
judicial-review ruling, affirming the agency’s decision.
IV. Conclusion.
Because we conclude the agency was not required to make specific
credibility findings in its decision, the unchallenged hearsay evidence was
admissible, and substantial evidence in the record supported the agency’s
findings of facts and determination that Jordan’s conduct constituted misconduct,
we affirm the district court’s judicial-review ruling.
AFFIRMED.