Utah Paiute Tribal Housing v. Workforce Services

2019 UT App 191THE UTAH COURT OF APPEALS
UTAH PAIUTE TRIBAL HOUSING AUTHORITY INC.,
Petitioner,
v.
DEPARTMENT OF WORKFORCE SERVICES,
WORKFORCE APPEALS BOARD,
Respondent.
Opinion
No. 20190164-CA
Filed November 21, 2019
Original Proceeding in this Court
James W. Jensen, Attorney for Petitioner
Amanda B. McPeck, Attorney for Respondent
JUDGE DIANA HAGEN authored this Opinion, in which
JUDGES GREGORY K. ORME and DAVID N. MORTENSEN concurred.
HAGEN, Judge:
¶1 Utah Paiute Tribal Housing Authority Inc. (the Housing
Authority) seeks judicial review of a Workforce Appeals Board
(the Board) decision that a former employee (the Employee) was
terminated without just cause and is thus entitled to
unemployment benefits. Because the Board’s findings and
conclusions are supported by substantial evidence, we decline to
disturb the Board’s decision.
Utah Paiute Tribal Housing Authority Inc. v.
Department of Workforce Services
BACKGROUND 1
¶2 This case concerns the dismissal of the Employee from her
employment with the Housing Authority, a Utah corporation
that assists members of the Paiute Indian Tribe of Utah in
obtaining affordable housing. 2 During the course of her
employment, the Employee reported to the Housing Authority’s
executive director. The executive director, in turn, reported to
the Board of Commissioners (the Commissioners), an
organization comprised of representatives from the different
bands of the Paiute Indian Tribe. Although the Paiute Indian
1. In reviewing a decision of the Board, “we view the facts in the
light most favorable to the [Board’s] findings” and recite them
accordingly. See Evolocity, Inc. v. Department of Workforce Services,
2015 UT App 61, ¶ 2 n.2, 347 P.3d 406.
2. “To provide and maintain housing for the needy, Congress
enacted the Housing Act of 1937.” Housing Auth. of Kaw Tribe of
Indians of Okla. v. City of Ponca City, 952 F.2d 1183, 1185 (10th Cir.
1991); accord 42 U.S.C. § 1437 (1988). Consistent with this
mandate, the Department of Housing and Urban Development
(HUD) has promulgated regulations for the creation of Indian
housing authorities. Id. Indian housing authorities, such as the
petitioner, may receive federal grants or apply to HUD for loans
that enable the housing authorities to develop or maintain low-
income housing for members of the tribes they serve. See
Marceau v. Blackfeet Housing Auth., 540 F.3d 916, 928 (9th Cir.
2008) (discussing how the Housing Act empowers Indian
housing authorities to apply to HUD for loans); Amerind Risk
Mgmt. Corp. v. Malaterre, 585 F. Supp. 2d 1121, 1127 (D.N.D.
2008) (discussing an Indian housing authority that received
federal grants to maintain reservation housing), rev’d on other
grounds, 633 F.3d 680 (8th Cir. 2011).
20190164-CA 2 2019 UT App 191Utah Paiute Tribal Housing Authority Inc. v.
Department of Workforce Services
Tribe has its own tribal council (the Tribal Council) that
authorizes the Housing Authority’s funding, the Tribal Council
does not fall directly within the Housing Authority’s chain of
command.
¶3 About one year into her employment with the Housing
Authority, the Employee began to suspect that the executive
director was misusing Housing Authority funds. She believed
that the Commissioners were reflexively supportive of the
executive director and would not take complaints about him
seriously. The Employee also testified that other individuals had
previously complained to the Tribal Council about the executive
director’s spending, but the Tribal Council had indicated that “it
was powerless to do anything without proof of wrongdoing.”
¶4 The Employee began collecting documents that she
believed supported her suspicions that the executive director
was misusing funds. She obtained a copy of a per diem check
from the Housing Authority made out to the executive director.
She also acquired a copy of the executive director’s travel
arrangements and corporate credit card statement, intending to
use the documents to show that the executive director had
inflated the amount of his per diem check and misused Housing
Authority funds on hotels and rental cars.
¶5 The Employee reported her suspicions to the Tribal
Council and provided the supporting documents. As a result,
the Tribal Council cancelled a scheduled meeting with the
Commissioners and provided the Commissioners with copies of
the documents. The Commissioners responded by alerting the
executive director of the allegations made by the Employee. The
executive director then terminated the Employee for violating
the Housing Authority’s non-disclosure policy, which the
Employee had previously agreed to, by revealing confidential
information.
20190164-CA 3 2019 UT App 191Utah Paiute Tribal Housing Authority Inc. v.
Department of Workforce Services
¶6 Following her termination, the Employee made a claim
for unemployment benefits. The Utah Department of Workforce
Services denied her claim, finding that the Employee was
discharged for “just cause.” The Employee appealed to an
administrative law judge (the ALJ), and the ALJ upheld the
original decision. The Employee appealed the ALJ’s decision to
the Board, which found that the Employee was terminated
without just cause. The Board accordingly reversed the
determination of the ALJ and held that the Employee was
entitled to unemployment benefits. The Housing Authority now
seeks judicial review of the Board’s decision.
ISSUE AND STANDARD OF REVIEW
¶7 The Housing Authority challenges the sufficiency of the
evidence to support the Board’s determination that the
Employee was terminated without just cause. This court “will
uphold the Board’s decision if its factual findings and
determinations are supported by substantial evidence when
viewed in light of the whole record.” Needle Inc. v. Department of
Workforce Services, 2016 UT App 85, ¶ 6, 372 P.3d 696 (cleaned
up). “Substantial evidence is that quantum and quality of
relevant evidence that is adequate to convince a reasonable mind
to support a conclusion and is more than a mere scintilla but
something less than the weight of the evidence.” Id. (cleaned up).
Additionally, this court defers to “the Board’s credibility
determinations and its resolution of conflicts in the evidence.” Id.ANALYSIS
¶8 “An employee is ineligible for unemployment insurance
benefits if the Board concludes that the employee was
discharged for just cause.” Davis v. Department of Workforce
Services, 2015 UT App 93, ¶ 8, 348 P.3d 352; see also Utah Code
20190164-CA 4 2019 UT App 191Utah Paiute Tribal Housing Authority Inc. v.
Department of Workforce Services
Ann. § 35A-4-405(2)(a) (LexisNexis 2015). “To establish ‘just
cause,’ three elements must be present: culpability, knowledge,
and control.” Autoliv ASP, Inc. v. Department of Workforce Services,
2001 UT App 198, ¶ 17, 29 P.3d 7; see also Utah Admin. Code
R994-405-202. Here, the Board concluded that the Housing
Authority failed to show all three elements—including
culpability. Because “the employer must satisfy all three
requirements to avoid paying unemployment compensation on
the ground the employee was fired for just cause,” and because
the employer has failed to establish culpability, we need not
consider the “knowledge” and “control” elements. See Provo City
v. Department of Workforce Services, 2012 UT App 228, ¶ 13 n.6,
286 P.3d 936 (citing Utah Admin. Code R994-405-202).
¶9 To establish culpability, “[t]he conduct causing the
discharge must be so serious that continuing the employment
relationship would jeopardize the employer’s rightful interest.”
Utah Admin. Code R994-405-202(1). However, “[i]f the conduct
was an isolated incident of poor judgment and there was no
expectation it would be continued or repeated, potential harm
may not be shown.” Id. “The claimant’s prior work record is an
important factor” in this determination because “[a]n employer
might not be able to demonstrate that a single violation, even
though harmful, would be repeated by a long-term employee
with an established pattern of complying with the employer’s
rules.” Id.
¶10 The Board’s determination that the Employee’s conduct
did not pose a serious risk to the Housing Authority’s rightful
interests is supported by substantial evidence. While the
Housing Authority has an interest in maintaining the
confidentiality of its financial records, this is not a typical breach
of confidentiality case. Rather, the Employee, rightly or wrongly,
suspected fraud, and the reporting of such suspicions is not
adverse to an employer’s rightful interests, but is very much
20190164-CA 5 2019 UT App 191Utah Paiute Tribal Housing Authority Inc. v.
Department of Workforce Services
consistent with them. Further, it was reasonable for the
Employee to believe that the Tribal Council was an appropriate
entity to report her suspicions to. After all, the Housing
Authority was distributing money on behalf of the tribe and
required the Tribal Council’s authorization to operate. The
Employee also had reason to believe that the Commissioners
would not take her suspicions seriously if she reported the
suspected fraud to them.
¶11 Even if the Employee made errors of judgment either in
reporting to the wrong entity or by disclosing confidential
information that was not strictly necessary to blow the whistle
on suspected wrongdoing, such an error would, at most, amount
to an isolated instance of poor judgment. This is especially true
given the fact that the Employee did not have any other
instances of misconduct during her time at the Housing
Authority.
¶12 The Housing Authority argues that the Employee did not
act in good faith because she (1) was aware of and agreed to the
Housing Authority’s nondisclosure policy, (2) “surreptitiously
obtained confidential and privileged information and
documentation” that was outside the scope of her employment,
(3) turned over that information and documentation to the Tribal
Council without authorization, and (4) sent derogatory text
messages about the executive director. But the Board weighed
the evidence and ultimately rejected the Housing Authority’s
arguments. And “it is the province of the Board, not appellate
courts, to resolve conflicting evidence, and where inconsistent
inferences can be drawn from the same evidence, it is for the
Board to draw the inferences.” Dinger v. Department of Workforce
Services, 2013 UT App 59, ¶ 20, 300 P.3d 313 (cleaned up). Where
“the evidence is disputed, as it was here, we defer to the Board’s
assessment of credibility and resolution of conflicting evidence.”
See id. (cleaned up).
20190164-CA 6 2019 UT App 191Utah Paiute Tribal Housing Authority Inc. v.
Department of Workforce Services
¶13 Accordingly, the Housing Authority is unable to satisfy
the culpability prong of the just cause analysis, and we decline to
disturb the Board’s decision.
CONCLUSION
¶14 The Board’s determination that the Housing Authority
failed to establish culpability is supported by substantial
evidence. Therefore, the Housing Authority has failed to show
that the Employee was terminated for just cause, and we decline
to disturb the Board’s decision that the Employee is entitled to
unemployment benefits.
20190164-CA 7 2019 UT App 191