IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
DIVISION ONE
PAMALA WAIAU, )
) No. 58503-7-I
Appellant, )
)
v. )
) UNPUBLISHED OPINION
STATE OF WASHINGTON, )
EMPLOYMENT SECURITY )
DEPARTMENT, )
)
Respondents. ) FILED: June 18, 2007
PER CURIAM. Under the Administrative Procedure Act (APA), agency
findings in adjudicative proceedings may be based on hearsay that would be
inadmissible in a civil trial. However, if the agency bases a finding exclusively
on hearsay, the statute requires the agency to explain why doing so does not
unduly abridge the parties' opportunities to confront witnesses and rebut
evidence. Pamala Waiau, who was denied unemployment benefits, claims that
the State Employment Security Department (Department) did not satisfy this
requirement in finding that her employment was terminated because of
misconduct. Because the Department provided no explanation for relying solely
on hearsay to make a critical credibility determination, we reverse and remand to
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the agency.
FACTS
Waiau worked for McClendon Hardware for approximately four and a half
years. McClendon management terminated her employment on April 4, 2005,
finding that Waiau had violated the company's attendance policy by failing to call
in on time before missing her work shift on April 3 and failing to appear for work
later that day when told to come in. McClendon's managers did not believe
Waiau's explanation that she had been up all night with her sick mother,
accidentally overslept and received permission from her supervisor not to come
in for the rest of the day when she called in late.
The previous December, Waiau had been suspended for what
McClendon management said were serious attendance problems. At that time,
Waiau was reminded of the company policy requiring employees to call in 30
minutes before their shift if they could not attend work. She was also told that
she needed to bring in a doctor's note for any absence greater than three days,
and was warned that if she acquired more than two unexcused absences in a
three-month period she would be terminated.1 Waiau was absent from work on
February 24 due to illness. Then one day in March, she was sent home by her
supervisor because she was ill. Although Waiau gave timely notice for each of
1 In various locations in its brief, the Department misstates this fact as a warning that if
Waiau was absent twice in a three-month period she would be terminated. This assertion is not
supported by the record, but the misstatement does not affect our decision.
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these occurrences and her supervisors did not dispute that she was actually sick both
times, they regarded these absences as unexcused. They thus considered her
behavior on April 3 as her third unexcused absence within three months,
contrary to the December warning.
Waiau sought unemployment compensation from the Employment
Security Department. The Department initially determined she was not eligible,
and Waiau requested a hearing before an Administrative Law Judge (ALJ).
McClendon management staff, Waiau and her husband testified at the hearing.
Although all witnesses agreed Waiau had not called in timely on April 3, the
parties disputed Waiau's reason for calling late and whether her supervisor,
Wayne Whitten, instructed her that she had to come in for the rest of the day.
The ALJ resolved the disputed facts in favor of Waiau based on
considerations of demeanor and the persuasiveness of the witness's positions.
The ALJ also noted the stated reasons for discharging Waiau diverged from the
legal standard for misconduct and concluded the record did not show
misconduct by Waiau because the evidence did not show that her absences or
failure to call in following the December warning were inexcusable within the
meaning of the statute.
McClendon then sought administrative review of the ALJ decision before
the Department Commissioner (Commissioner).2 The Commissioner adopted
2 Although the reviewing officer is actually an administrative review judge designated by
the Commissioner's Review Office of the Employment Security Department to hear such
appeals, this opinion follows the convention used by the parties and in the Superior Court and
refers to the reviewing officer as the Commissioner and the resulting order as the
Commissioner's order.
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most, but not all of the ALJ's factual findings, struck the findings determining the
comparative credibility of the witnesses and made new findings that Waiau's
explanation for the events of April 3 was not credible. The Commissioner found
that Waiau's explanation to unnamed Department employees, who interviewed
her by telephone during the Department's investigation, was not consistent with
her testimony at the hearing. The Commissioner therefore concluded Waiau did
not establish a reason for her failure to comply with the policy or for her absence
on April 3 and reversed the ALJ decision.
Waiau then filed a petition for judicial review of the Commissioner
decision in superior court. The superior court denied the petition. This appeal
follows.
DECISION
The Washington Administrative Procedure Act (WAPA), chapter 34.05
RCW, governs judicial review of final agency action. When reviewing agency
action, this court "sits in the same position as the superior court, applying the
standards of the WAPA directly to the record before the agency." Tapper v.
Employment Sec. Dep't, 122 Wn.2d 397, 402, 858 P.2d 494 (1993). The court
will reverse an agency decision only if it finds that (1) the agency erroneously
interpreted or applied the law, or (2) substantial evidence does not support the
decision, or (3) the order is arbitrary or capricious. RCW 34.05.570(3). The
party challenging an agency decision must establish error. RCW
34.05.750(1)(a). We review the Department's legal decisions de novo, giving
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deference to its interpretation of employment security law. Safeco Ins. Cos. v.
Meyering, 102 Wn.2d 385, 391, 687 P.2d 195 (1984). When, as here, the
Commissioner substitutes his findings for the initial findings of the ALJ, our
review is of the Commissioner's decision. Tapper, 122 Wn.2d at 404-05; RCW
34.05.464(4).
Waiau first contends that the Commissioner erred as a matter of law by
basing a crucial factual finding regarding Waiau's credibility solely on hearsay
without making the statutorily required determination that doing so would not
unduly abridge her right to confront witnesses and rebut evidence.
RCW 34.05.461(4) provides that:
Findings of fact shall be based exclusively on the evidence of
record in the adjudicative proceeding and on matters officially
noticed in that proceeding. Findings shall be based on the kind of
evidence on which reasonably prudent persons are accustomed to
rely in the conduct of their affairs. Findings may be based on such
evidence even if it would be inadmissible in a civil trial. However,
the presiding officer shall not base a finding exclusively on such
inadmissible evidence unless the presiding officer determines that
doing so would not unduly abridge the parties' opportunities to
confront witnesses and rebut evidence. The basis for this
determination shall appear in the order.
According to Waiau's testimony at the hearing, at approximately 1:00 a.m.
on April 3, she had received a call from a friend of her mother's. Waiau's
mother, who suffers from bipolar disorder and dementia, had the friend take her
to Evergreen Hospital, but then became disoriented and refused go in, saying
she was at the wrong hospital. Waiau's mother became upset and wanted
Waiau to pick her up, which she did. Waiau took her mother back to her
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mother's house and stayed with her because of her agitated condition and the
lack of any other caregiver. Waiau was up very late and fell asleep at
approximately 4:00 or 5:00 a.m., and did not wake up until after 10:00 a.m.,
when she called in and spoke to Whitten. According to Waiau, after she
apologized for calling late and explained she had to go up north to get her
mother from the hospital, Whitten said it was up to her if she should come in to
work that day. Because she was still exhausted, she did not go into work until
the next day when Whitten told her she was terminated.
In deciding Waiau was not credible, the Commissioner relied on exhibits
5, 6 and 7, which were notes typed on a form by an unidentified Department staff
member who interviewed Waiau by telephone for the Department's initial
determination regarding benefits. At the hearing before the ALJ, Waiau
repeatedly objected that the exhibits were inaccurate and the ALJ did not rely on
them or find them an impediment to Waiau's credibility. The Commissioner,
however, viewed Waiau's statements as reported in the notes as inconsistent
with each other and her trial testimony.3 We agree with Waiau that the
determination rejecting Waiau's credibility was crucial to the Commissioner's
conclusion that Waiau had engaged in misconduct.4
3 The Commissioner also referred to a letter written by Waiau to the Department.
However, as Waiau contends and the Department does not dispute, that letter did not impeach
Waiau because it was consistent with her testimony at the hearing.
4 While the Commissioner listed several of the enumerated statutory bases for a finding
of misconduct, the factual characterization of the April 3 incident as willful or not was
determinative of each of the alternate bases, as is demonstrated by the difference between the
ALJ's and the Commissioner's decisions.
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The Department does not dispute that the exhibits were hearsay, or that
the Commissioner offered no justification for their use under RCW 34.05.461(4),
but contends that other evidence in the record, specifically Whitten's testimony
at the hearing before the ALJ, could have supported a finding that Waiau was
not credible. Thus, the Department argues, the Commissioner's finding was not
"exclusively" based on the hearsay in the exhibits and the failure to make the
statutory finding regarding use of that evidence was not error.
This claim fails. RCW 34.05.461(3) requires final agency orders to include
"a statement of findings and conclusions, and the reasons and basis therefor, on
all the material issues of fact" and further specifically requires that "[a]ny findings
based substantially on credibility of evidence or demeanor of witnesses shall be
so identified." The Commissioner's findings did not rely on Whitten's testimony
as a reason to find Waiau not credible. A court reviewing agency action under
the APA has authority only to affirm, reverse or remand administrative
proceedings to the agency. RCW 34.05.574(1)(b). A reviewing court has no
authority to modify an agency's decision, which is effectively what the
Department asks us to do. See Skold v. Johnson, 29 Wn. App. 541, 549-50 n.6,
630 P.2d 456 (1981); Pennsylvania Life Ins. Co. v. Employment Sec. Dep't., 97
Wn.2d 412, 417, 645 P.2d 693 (1982). Waiau has met her burden of
demonstrating prejudicial legal error, and we accordingly must remand. On
remand, the Commissioner is not precluded from entering factual findings that
do not repeat the error.
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Waiau also complains that the Commissioner misapplied the law to the
facts because her absences were necessarily excusable under the statute. But
Waiau's arguments in this regard presuppose that the disputed facts are
ultimately resolved in her favor which, for the reasons stated above, this court
cannot do. Nor would it be proper for this court to resolve Waiau's related claim
that McClendon's policy of counting days missed because of illness as
unexcused absences is contrary to the statute. This issue may be of no
moment, depending on the ultimate determination of the facts. Waiau's
argument is essentially a request that this court render an improper advisory
opinion. See Walker v. Munro, 124 Wn.2d 402, 414, 879 P.2d 920 (1994).
Waiau seeks attorney fees. As the prevailing party on appeal, Waiau is
entitled to reasonable attorney fees for proceedings in the superior court and
this court. See RCW 50.32.160; Ancheta v. Daly, 77 Wn.2d 255, 461 P.2d 531
(1969); Delagrave v. Employment Sec. Dep't, 127 Wn. App. 596, 111 P.3d 879
(2005). Waiau is accordingly awarded fees for proceedings in this court, subject
to compliance with RAP 18.1. After the Commissioner has filed a new decision,
the matter should be sent to the superior court for the award of attorney fees and
costs incurred by Waiau at the superior court level. See Delagrave, 127 Wn.
App. at 613. We award no fees for proceedings at the administrative level
because the ultimate outcome of those proceedings has not been determined.
We reverse and remand for further proceedings consistent with this
opinion.
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FOR THE COURT:
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