DO NOT CITE. SEE RAP 10.4(h).
Court of Appeals Division I
State of Washington
Opinion Information Sheet
Docket Number: 51837-2-I
Title of Case: Sheila Dahlgren, Appellant v. Employment
Security Department, Respondent
File Date: 12/15/2003
SOURCE OF APPEAL
----------------
Appeal from Superior Court of King County
Docket No: 02-2-14195-1
Judgment or order under review
Date filed: 01/17/2003
JUDGES
------
Authored by Ronald E. Cox
Concurring: C. Kenneth Grosse
Susan R. Agid
COUNSEL OF RECORD
-----------------
Counsel for Appellant(s)
Ellen M. Ryan
Law Office of Ellen Ryan
1001 4th Ave Ste 4321
Seattle, WA 98154-1192
Counsel for Respondent(s)
Masako Kanazawa
Attorney at Law
900 4th Ave Ste 2000
Seattle, WA 98164-1076
IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
)
SHEILA M. DAHLGREN, ) No. 51837-2-I
)
Appellant, ) DIVISION ONE
)
v. )
)
EMPLOYMENT SECURITY )
DEPARTMENT OF THE STATE OF )
WASHINGTON, ) UNPUBLISHED
)
Respondent. ) FILED:
)
COX, A.C.J. -- Sheila Dahlgren appeals a superior court's order
affirming the decision of the Commissioner of the Employment Security
Department (ESD) to set aside the decision of the ESD to grant unemployment
benefits. The challenged findings of fact are either supported by
substantial evidence or are not prejudicial to Dahlgren. The findings
support the conclusion that Dahlgren committed misconduct that barred
receipt of benefits. Dahlgren also fails to show any reversible error
based on her claim of violation of due process. We affirm.
Dahlgren began her employment with Hercules Forwarding in June 1999. She
was responsible for managing accounts and selling freight services.
Hercules terminated her employment in November 2001. She then applied for
unemployment benefits, stating she was unemployed because of lack of work.
In January 2002, ESD awarded Dahlgren unemployment benefits.
Later that month, Hercules appealed the ESD's decision to award
unemployment benefits. Hercules claimed Dahlgren's termination was due to
her misconduct, claiming she crossed out the 'driver-collect' information
on a freight bill and directed the delivery of freight in violation of
company policy. A 'driver-collect' designation requires the delivery
driver to collect payment for freight charges before the freight may be
offloaded. It is used to ensure Hercules' receipt of payment from
financially distressed companies.
An administrative law judge heard the case and ruled in favor of Hercules.
Dahlgren timely petitioned for review in April 2002, and the Commissioner
affirmed the ALJ's order.
Dahlgren then petitioned for review by the superior court. That court
affirmed the Commissioner's decision, affirming the ALJ's order.
Dahlgren appeals.
In an appeal from an ESD decision, we apply the appropriate standards of
review from RCW 34.05.570 directly to the agency record.1 Relief from such
decisions will be granted when an agency erroneously interpreted or applied
the law or the decision is not supported by substantial evidence.2 The
burden of proving that the agency's action was invalid for any of these
reasons lies with Dahlgren, as the party challenging the action.3
Whether Dahlgren's behavior was misconduct presents a mixed question of law
and fact. In addressing the factual aspects of this challenge, we give the
same deference to the agency's factual findings as in other circumstances.4
In addressing the legal aspects of this challenge, however, we apply the
law to the facts de novo.5 The Commissioner's decision is 'prima facie
correct,'6 and the court may grant relief only if the petitioner
establishes she 'has been substantially prejudiced by the action complained
of.'7
FINDINGS AND CONCLUSIONS
Dahlgren argues that there was not substantial evidence to support findings
of fact 2, 5, 7, 8, 9, 10, 11, 12, and 13. We hold that there is
substantial evidence to support most of the challenged findings. We also
hold that Dahlgren fails to prove she has been substantially prejudiced by
any finding of fact that is not supported by substantial evidence.
Dahlgren assigns error to finding of fact 2, claiming there is no
admissible evidence that provided a reason why she was terminated. She
claims the president of the company, Martin Burnham, the only person with
personal knowledge regarding her reason for termination, did not testify at
the hearing, and therefore any statements he made regarding her termination
were inadmissible hearsay. Dahlgren cites RCW 34.05.461(4) for the
proposition that a hearing officer may base a finding exclusively on
inadmissible evidence only if the hearing officer determines that doing so
would not unduly abridge a party's opportunity to confront witnesses and
rebut the evidence. However, the ALJ may base a finding of fact on hearsay
so long as it is not the sole basis for the finding.8 Finding 2 is not
based exclusively on inadmissible hearsay. Only one person with knowledge
regarding Dahlgren's termination did not testify. Three other witnesses
gave admissible testimony and were cross-examined by Dahlgren. Further,
the '{f}indings may be based on such evidence even if it would be
inadmissible in a civil trial.'9
Dahlgren next claims the record lacks substantial evidence to support
findings of fact 5 and 6. We disagree.
Ed Corker, Dahlgren's supervisor, testified that a sales representative's
alteration of the driver-collect notation on a freight bill without
management approval is a violation of the company policy. This was a
reasonable ground for discharge. Additionally, Michelle Castanon testified
that altering a freight bill was a serious violation of company policy, and
a sales representative could be terminated for altering a freight bill.
Corker and Office Manager Carrie Robinson testified that Dahlgren had
reason to know and was informed that Serta was in Chapter 11 and had a
'driver-collect' account. Dahlgren testified that she knew Serta was a
Chapter 11 debtor.
There was substantial evidence to support these findings.
Dahlgren next challenges finding of fact 7. It is unclear whether Dahlgren
wrote 'send merchandise back' on the freight bill. That Dahlgren knew
Serta was unable to pay its freight bill is supported by substantial
evidence in the record. Corker testified that he had a brief conversation
with Dahlgren and that she said she knew that Serta did not have money to
pay the freight bill, but she could not see not delivering it and sending
it back to the manufacturer. There was testimony that Dahlgren had decided
to allow the delivery without collection of the money.
Furthermore, whether Dahlgren wrote 'send merchandise back' on the freight
bill is immaterial. Dahlgren knew of the policy against changing driver-
collect notations without authorization. Yet she intentionally authorized
the delivery. She knew that the change could harm the company.
Substantial evidence supports finding of fact 7.
Appellant correctly argues that finding of fact 8 is not supported by
substantial evidence. That finding states the date of Hercules' last
shipment to Serta. But Dahlgren fails to state how this finding
substantially prejudices her case. This does not constitute reversible
error.
Findings of fact 9 and 10 deal with the demeanor and credibility of
witnesses. We do not review the ALJ's judgment on credibility.10 As to
finding of fact 10, it merely represents what the record reflects. This is
not error.
Dahlgren argues finding of fact 11 is not supported by substantial
evidence. Robert Bolosan's testimony and letters signed by Bolosan and
Robinson comprise substantial evidence that support this finding.
Dahlgren next disputes finding of fact 12, the ALJ's finding that
Bolosan's testimony was credible, a matter we do not review. Although
there is no reference in the record that Dahlgren demanded delivery to
Serta by 8 a.m., this finding does not prejudice her. The balance of the
finding is supported by substantial evidence in Bolosan's testimony.
Dahlgren finally argues finding of fact 13 is not supported by
substantial evidence. Notwithstanding this assertion, there is substantial
evidence in the record that Hercules is harmed by improperly changing a
'driver-collect' designation.
In sum, there is substantial evidence to support the material findings
of fact.
MISCONDUCT
Dahlgren next attacks the ALJ's conclusions of law. We apply the law to
the facts and review conclusions of law de novo.11 While the ESD sets aside
funds for the benefit of 'persons unemployed through no fault of their
own,'12 the ESD may deny unemployment benefits if an employee commits
workplace misconduct.13 Misconduct is 'an employee's act or failure to act
in willful disregard of his or her employer's interest where the effect of
the employee's act or failure to act is to harm the employer's business.'14
Misconduct is established upon a showing the employee (1) willfully
disregarded her employer's interest, and (2) thereby harmed its business.15
A showing of 'willful disregard' is analyzed under a three-part test from
Hamel.16 Willful disregard is established when an employee '(1) is aware of
{her} employer's interest; (2) knows or should have known that certain
conduct jeopardizes that interest; but (3) nonetheless intentionally
performs the act, willfully disregarding its probable consequences.'17
Here, the facts are sufficient to establish Dahlgren's willful disregard.
Dahlgren was aware of Hercules' interest in ensuring a receipt of payment,
and that crossing off a driver-collect notation jeopardized Hercules'
interest. Corker testified that Dahlgren acknowledged Serta was in Chapter
11 prior to the incident and Dahlgren knew Serta was in Chapter 11.
Additionally, she knew or should have known that the driver-collect policy
was a way to ensure payment when a company was past due in payment for
previous shipments or if the company was in Chapter 11. Dahlgren knew or
should have known that to allow the delivery to Serta without observing the
policy would be harmful to Hercules' interests and is 'like taking $270 out
of the owner's pocket.'18 The first and second parts of the Hamel test are
met.
The third part of the Hamel test that requires an intentional act was also
met. Dahlgren cites Wilson v. Employment Security Department19 for the
proposition that violation of employer policy without intent to cause harm
is not misconduct. Dahlgren's reliance on Wilson is misplaced. Wilson
actually holds that a negligent act, 'not in defiance of a specific policy'
does not without more, constitute willful disregard.20 Dahlgren knew Serta
was in Chapter 11, but nonetheless ignored the driver-collect policy.
Bolosan brought Dahlgren the Serta freight bill, pointing out the driver-
collect notation, and she handed it back to him with the notation being
crossed out, telling him to go ahead and deliver it.
Further, the ALJ found evidence Dahlgren crossed out the driver-collect
notation because she 'couldn't see not delivering it' and didn't want to
send it back to the manufacturer. She testified that although she knew
that Serta was in Chapter 11 she had reasons to deliver it anyway.
Dahlgren claims crossing out the notation was, '{i}f anything it was a
definite lapse in judgment.'21 Her act was not a negligent violation of
policy; there is substantial evidence that a willful, volitional act
occurred.
We hold Dahlgren met the elements of the three-part Hamel analysis,
willfully disregarding Hercules' interests.
HARM TO EMPLOYER'S BUSINESS
The second prong of a misconduct analysis requires a determination of harm
to the employer. Dahlgren argues Hercules failed to demonstrate any damage
occurred from crossing off the 'driver-collect' notation. Harm is shown
upon evidence of 'actual detriment to {Hercules'} operations.'22 The harm,
however, 'need not be tangible or economic,' so long as it is 'more than
imaginary or theoretical.'23 An employee's failure to comply with an
employer's reasonable rule has been held disqualifying misconduct under
this test.24
Dermond v. Employment Security Department provides an example of what
constitutes harm to an employer. A showing of economic harm is not
necessary. In Dermond, a telecommunications analyst violated company
policy by refusing to notify her supervisor of problems in a voice
communications system for which she was responsible. The refusal to notify
a supervisor 'led to confusion, the possibility of increased delays, the
possibility of overloading , and prevented {the supervisor} from taking
steps to monitor and coordinate the overall situation.'25 The court of
appeals concluded harm could be in the form of detriment to the efficient
operation of a business. By crossing off the 'driver-collect' designation,
Dahlgren directly violated a clear and reasonable policy central to her
employer's efficient operation of business. Additionally, Dahlgren
created the possibility of real economic loss.
The ALJ's findings showed Dahlgren's conduct possibly affected the quality
of customer service, its business reputation, and its profit. Dahlgren
knew Serta did not have any money at the delivery location and could not
write checks for money they owed Hercules, but she nonetheless instructed
delivery. Further, the employee who does not follow the driver-collect
rule puts the company at great risk of not receiving payment for freight
services rendered and by 'creating the impression that customers don't have
to pay Hercules for its services.'
We hold Dahlgren committed misconduct by acting in willful disregard of
Hercules' interest and harming the efficient operation of its business.
DUE PROCESS
Dahlgren argues the ALJ engaged in unlawful procedures in the hearing which
indicated bias in favor of Hercules. We disagree.
The ALJ's actions at the hearing do not demonstrate bias or prejudice. The
ALJ has broad discretion over order of presentation of evidence, witnesses,
and procedural matters, and may take any appropriate action to maintain
order during the hearing.26 The judge may focus the parties on relevant
legal issues and avoid needless waste of time.27
Given the ALJ's broad discretion, we conclude the ALJ acted within the
scope of her authority and that Dahlgren failed to establish that the ALJ's
actions substantially prejudiced her case.
Dahlgren first argues that an ex-parte communication prejudiced her case.
Her basis for this challenge comes from the ALJ's statement when
reconvening the hearing with two new witnesses after a brief recess. A
presiding officer is prohibited from making ex-parte communications in a
proceeding other than communications necessary 'to procedural aspects of
maintaining an orderly process, with any person not employed by the
agency who has a{n} interest in the outcome of the proceeding, without
notice and opportunity for all parties to participate.'28 The ALJ merely
updated the witnesses on the status of the case factually and procedurally,
stating:
I did do a summary to Mr. Bolosan and Mr. Corker as to the
hearing up to this point in time so that they are up to speed
in terms of the employer's case and the claimant's case, and
also gave a brief explanation of what the rest of the hearing
process will be like since they were not a part of the first
portion of this hearing
Here, the summary and brief explanation of the rest of the hearing helped
to maintain an orderly process.
Dahlgren asserts, 'Nothing in the record indicates' that it was
procedurally necessary. It is Dahlgren's burden to prove an invalid agency
action and substantial prejudice. But Dahlgren fails to explain why the
challenged communication was not procedurally necessary or how it
substantially prejudiced her case.29 We hold the ALJ did not initiate an
invalid ex-parte contact.
Dahlgren next argues the ALJ violated RCW 34.05.455 and WAC 10-16-010
by not issuing subpoenas for her personnel file, the Serta freight bill,
and the driver-collect policy. But the failure of the ALJ to subpoena
these three documents did not substantially prejudice Dahlgren's case. The
information contained in her personnel record would not have shed any light
on her lack of authority to cross out a driver-collect notation, or helped
to prove her actions did not harm Hercules. The key issue here is whether
Dahlgren engaged in misconduct, not whether she had previously been a good
employee. There is no showing that the failure to subpoena the requested
documents prejudiced her case.
Dahlgren next argues that the ALJ violated the procedures of the
Administrative Procedure Act by failing to record an ex-parte contact. An
ALJ may engage in ex-parte contacts to address uncontested procedural
matters. The ALJ was thus not required to place Dahlgren's subpoena
request on the record. Further, the ex-parte contact was initiated by
Dahlgren herself. The rule against ex-parte contacts applies to the
parties 'aggrieved or adversely affected'30 by ex-parte communication, thus
Dahlgren lacks standing to bring this claim.
Dahlgren finally argues the hearing with the ALJ violated her procedural
due process rights. The courts have recognized three types of bias that
call for disqualification of the decision-maker: '(1) prejudgment
concerning issues of fact about parties in a particular case; (2)
partiality evidencing a personal bias or personal prejudice signifying an
attitude for or against a party as distinguished from issues of law or
policy; and (3) an interest {in the outcome}.'31 Dahlgren claims the ALJ
made a prejudgment in favor of the employer, but cites only to portions of
the record where the ALJ summarized Bolosan's testimony as evidence of
prejudgment and bias.
In reality, the ALJ complied with the APA and provided a fair hearing, at a
'meaningful time in a meaningful manner.'32 The ALJ allowed each side to
present testimony, cross-examine witnesses, present closing statements and
have an opportunity to present additional testimony. Further, the ALJ's
handling of the witnesses and the subpoena requests demonstrates no
prejudice against Dahlgren. We hold there was no violation of Dahlgren's
due process in the hearing.
ATTORNEY FEES
Dahlgren requests reasonable attorney fees and costs under RCW
50.32.160, which provides that an unemployment compensation claimant is
entitled to fees and costs if it is determined that the decision of the
Commissioner is modified or reversed. Because we affirm the decision of
the Commissioner, Dahlgren's claim for attorney fees is denied.
We affirm the order of the ESD denying unemployment benefits.
WE CONCUR:
1 Dermond v. Employment Sec. Dep't, 89 Wn. App. 128, 132, 947 P.2d 1271
(1997) (citations omitted).
2 RCW 34.05.570(3)(d).
3 RCW 50.32.150; RCW 34.05.570(1)(a).
4 Dermond, 89 Wn. App. at 132.
5 Dermond, 89 Wn. App. at 132.
6 RCW 50.32.150.
7 RCW 34.05.570(1)(d).
8 RCW 34.05.461(4).
9 RCW 34.05.461(4).
10 Western Ports Transport, Inc. v. Employment Sec. Dep't, 110 Wn. App.
440, 449, 41 P.3d 510 (2002).
11 Tapper v. Employment Security Department, 122 Wn.2d 397, 403, 858 P.2d
494 (1993).
12 RCW 50.01.010; Safeco Ins. Companies v. Meyering, 102 Wn.2d 385, 392, 687
P.2d 195 (1984).
13 Tapper, 122 Wn.2d at 409.
14 RCW 50.04.293.
15 Haney v. Employment Sec. Dep't, 96 Wn. App 129, 138, 978 P.2d 543 (1999);
Hamel v. Employment Sec. Dep't, 93 Wn. App. 140, 145, 966 P.2d 1282 (1998),
review denied, 137 Wn.2d 1036 (1999).
16 Hamel, 93 Wn. App. at 146-47.
17 Hamel, 93 Wn. App. at 146-47.
18 Commissioner's Record, February 19, 2002, at 108.
19 87 Wn. App. 197, 940 P.2d 269 (1997).
20 Wilson, 87 Wn. App. at 203.
21 Although Dahlgren denies crossing out the driver-collect notation, she
also states, she may have allowed delivery without the driver-collect
notation, claiming, 'If anything it was a definite lapse in judgment.'
22 Dermond, 89 Wn. App. at 135-36.
23 Dermond, 89 Wn. App. at 135.
24 See Peterson v. Employment Sec. Dep't, 42 Wn. App. 364, 370-71, 711 P.2d
1071 (1985).
25 Dermond, 89 Wn. App. at 136.
26 See WAC 10-08-200(1), (4), (8), (9), (11).
27 See ER 611(a)(b).
28 RCW 34.05.455(2).
29 RCW 34.05.570(a)(d).
30 RCW 34.05.530.
31 Washington Medical Disciplinary Board v. Johnston, 99 Wn.2d 466, 474, 663
P.2d 457 (1983) (citations omitted).
32 Mathews v. Eldridge, 424 U.S. 319, 334, 96 S. Ct. 893, 47 L. Ed. 2d 18
(1976) (citations omitted).
|