Opinion
No. 1526 C.D. 2011
09-14-2012
Pennsylvania Liquor Control Board, Petitioner v. Unemployment Compensation Board of Review, Respondent
BEFORE: HONORABLE BONNIE BRIGANCE LEADBETTER, Judge HONORABLE MARY HANNAH LEAVITT, Judge HONORABLE JAMES GARDNER COLINS, Senior Judge OPINION NOT REPORTED MEMORANDUM OPINION BY SENIOR JUDGE COLINS
This case was reassigned to the author on July 2, 2012.
Pennsylvania Liquor Control Board (Employer) petitions this court for review of the order of the Unemployment Compensation Board of Review (Board), which affirmed and adopted the referee's determination that Zenola Davis (Claimant) was not ineligible to receive unemployment compensation benefits under Section 402(e) of the Unemployment Compensation Law (Law). We affirm.
Act of December 5, 1936, Second Ex. Sess., P.L. (1937) 2897, as amended, 43 P.S. § 802(e). Section 402(e) of the Law provides that an employee shall be ineligible for compensation for any week "[i]n which his [or her] unemployment is due to . . . discharge or temporary suspension from work for willful misconduct connected with [her] work . . . ."
The referee found the following facts. Claimant was employed beginning in June 1989 until her last day worked on December 23, 2010. (Referee's Decision and Order, Findings of Fact (F.F.) ¶¶1, 11.) At all relevant times, she held the position of general manager. (F.F. ¶2.) Claimant's regular store assignment was store #5135. (F.F. ¶2.) Employer also assigned Claimant to other stores that it considered to have management or employee problems. (F.F. ¶3.) In 2010, Employer assigned Claimant to work in five different stores. (F.F. ¶4.) Two of these problem stores were store #5180, at Broad Street and Allegheny Avenue, and store #5142, at American and Lehigh Avenues, both in Philadelphia. (F.F. ¶3.) While working at her regular store, Claimant issued a written warning to an assistant manager who had permitted a clerk to accept a very large shipment without properly documenting it. (F.F. ¶9.) While assigned to store #5180, Claimant issued written warnings to a clerk working at that store. (F.F. ¶6.) While assigned to store #5142, Claimant demoted a clerk (KP) working at that store. (F.F. ¶12.) Claimant frequently used profanity, and on occasions discussed her sex life, in conversations in front of and with employees, but not in front of customers. (F.F. ¶¶7-8, 10.)
On December 15, 2010, KP, after Claimant had demoted her, filed a complaint in Employer's central office regarding Claimant's comments and language. (F.F. ¶13.) In response to the complaint, Employer's human resources staff interviewed numerous employees who worked with Claimant over her last year. (F.F. ¶14.) Employer suspended Claimant on December 23, 2010, and later terminated her employment for making inappropriate comments of a sexual nature in the presence of subordinate employees, which according to Employer created a hostile work environment, and for directing profane comments toward or in the presence of subordinate employees. (F.F. ¶15.)
Claimant filed for unemployment benefits and the local service center found Claimant eligible to receive them. Employer appealed and the referee conducted a hearing during which Claimant and six Employer witnesses testified. The referee found Claimant's testimony to be credible regarding the material facts and ruled in her favor. The referee found that Employer's witnesses established that Claimant used "profanity and ribald references," but found in Claimant's favor, reasoning that (1) Claimant's conduct did not rise to the level of harassment because profanity and "racy" conversations were not uncommon in these workplaces and Employer's witnesses could not reasonably have been offended or threatened by such language; and that (2) Employer had endorsed, or at least ignored, Claimant's management methods and continued to assign her as the "cleanup person" for "problem" stores for some time. (Referee's Decision and Order at 2-3.)
Employer appealed to the Board and the Board affirmed and adopted the referee's decision. The Board reiterated that Claimant's profane and sexual language did not rise to the level of harassment and made additional findings that (1) Employer never warned Claimant regarding her use of profane language and had no policy prohibiting profane language and (2) Employer never warned Claimant regarding her use of sexual language and had no policy prohibiting sexual language. (Board's Order at 1.) Employer appealed to this Court.
Our scope of review of the Board's decision is limited to determining whether an error of law was committed, constitutional rights were violated, and necessary findings of facts were supported by substantial evidence. Frazier v. Unemployment Compensation Board of Review, 833 A.2d 1181, 1183 n.4 (Pa. Cmwlth. 2003) (en banc). The Board is the ultimate fact-finding body in unemployment matters and is empowered to resolve conflicts in evidence, to determine what weight is to be accorded the evidence, and to determine the credibility of witnesses. Guthrie v. Unemployment Compensation Board of Review, 738 A.2d 518, 521 (Pa. Cmwlth. 1999). The Board's findings of fact are conclusive on appeal so long as the record, taken as a whole, contains substantial evidence to support those findings. Id. Substantial evidence is such relevant evidence that a reasonable mind would accept as adequate to support a conclusion. Id.
Employer makes six interrelated arguments on appeal: (1) the Board erred as a matter of law in finding that Claimant's conduct was not disqualifying under Section 402(e) of the Law, regardless of whether any work policy was violated; (2) substantial evidence does not support the findings that Employer never warned Claimant regarding sexual harassment and that Employer does not have a policy against sexual language; (3) substantial evidence does not support the findings that Employer never warned Claimant regarding the use of profane language and that Employer does not have a policy against it; (4) the Board capriciously disregarded evidence of Employer's policies regarding sexual harassment, discourtesy to customers and fellow employees, and common decency and morality; (5) substantial evidence does not support the finding that Employer tolerated Claimant's behavior; and (6) substantial evidence does not support the finding that Claimant reasonably believed her conduct was condoned and would not lead to discharge.
It is well-settled that in unemployment compensation cases the burden of proving willful misconduct is on the employer. Guthrie v. Unemployment Compensation Board of Review, 738 A.2d 518, 521 (Pa. Cmwlth. 1999). Although willful misconduct is not defined by statute, it has been judicially described as: (1) the wanton and willful disregard of the employer's interests, (2) the deliberate violation of rules, (3) the disregard of standards of behavior that an employer can rightfully expect from his employee, or (4) negligence that manifests culpability, wrongful intent, evil design, or intentional and substantial disregard for the employer's interests or the employee's duties and obligations. Frumento v. Unemployment Compensation Board of Review, 466 Pa. 81, 351 A.2d 631 (1976). Whether a claimant's actions rise to the level of willful misconduct is a question of law fully reviewable on appeal. Guthrie, 738 A.2d at 521.
In willful misconduct cases involving violation of a work rule, the employer bears the burden of proving the existence of the rule, its reasonableness, that the employee was aware of its existence, and the fact that the claimant violated it. Walsh v. Unemployment Compensation Board of Review, 943 A.2d 363, 369 (Pa. Cmwlth. 2008); Williams v. Unemployment Compensation Board of Review, 926 A.2d 568, 571 (Pa. Cmwlth.), appeal denied, 596 Pa. 712, 940 A.2d 368 (2007); Guthrie, 738 A.2d at 521. If the employer proves these requirements, the burden shifts to the claimant to prove good cause for violating the rule, meaning that her actions were justified or reasonable under the circumstances. Guthrie, 738 A.2d at 522; Walsh, 943 A.2d at 369. Willful misconduct will not be found where a claimant has shown good cause for her actions, i.e., that the actions which resulted in the discharge were justifiable and reasonable under the circumstances. See, e.g., Perez v. Unemployment Compensation Board of Review, 736 A.2d 737 (Pa. Cmwlth. 1999).
Even in the absence of an applicable work rule, an employee's use of abrasive, vulgar, or offensive language can evidence a disregard of standards that an employer may expect of its employees. Allen v. Unemployment Compensation Board of Review, 638 A.2d 448, 451 (Pa. Cmwlth. 1994). Whether the language in question rises to the level of willful misconduct is determined by evaluating its use in context and in accordance with modern parlance. Cundiff v. Unemployment Compensation Board of Review, 489 A.2d 948, 951 (Pa. Cmwlth. 1985). Willful misconduct is not satisfied where the language in question was provoked or de minimis in nature. Id. at 950.
We begin with Employer's argument that the Board erred in concluding that Claimant's conduct was not disqualifying under Section 402(e) of the Law, because her conduct amounted to willful misconduct regardless of any work rule or policy. Employer urges the Court to adopt its version of the facts presented at the hearing: some witnesses testified that Claimant directed profane and sexual language at them, that she used profane and sexual language among them, that she used profane language in front of customers, that she would play music containing profane and sexual lyrics during business hours, and that at least one witness was made uncomfortable by Claimant's use of profanities. Claimant responds that the Board rejected Employer's version of the facts and that the facts, as found by the Board, support the holding that Claimant's conduct did not rise to the level of willful misconduct. We agree with Claimant.
The Board's findings of fact are binding on this Court where they are supported by substantial evidence, even if there is other contrary evidence. Borough of Coaldale v. Unemployment Compensation Board of Review, 745 A.2d 728, 731 (Pa. Cmwlth. 2000); Guthrie, 738 A.2d at 521; Hussey Copper Ltd. v. Unemployment Compensation Board of Review, 718 A.2d 894, 900 n.9 (Pa. Cmwlth. 1998). The evidence must be viewed in the light most favorable to Claimant, as the party who prevailed before the Board, with all reasonable and logical inferences taken in her favor. Mutual Pharmaceutical Co. v. Unemployment Compensation Board of Review, 654 A.2d 37, 40 n.5 (Pa. Cmwlth. 1994). It is, therefore, the Board's facts, and not Employer's preferred version of the facts, that control. Borough of Coaldale, 745 A.2d at 731-32.
Here, Employer's arguments ignore the Board's credibility determinations, which are supported by substantial evidence and bind us on appeal. The referee made crucial credibility determinations in Claimant's favor and against Employer's witnesses. Thus, where Employer recaps its witnesses' testimony that Claimant directed profane and abusive language at them, the Board rejected most of that testimony and accepted the testimony of Claimant. For example, Claimant denied making the specific profane comments that Employers' witnesses alleged and she denied having ever made profane comments in front of customers. (Hearing Transcript (H.T.) at 54-55, Reproduced Record (R.R.) at 85a-86a.) She admitted to using the phrase "stuck on stupid" and she admitted she would occasionally "curse" and tell employees to "stop farting around and get to work." (H.T. at 55, R.R. at 85a.)
Claimant testified that she did not use the phrase "stuck on stupid" with employees, but directed it at a customer who, at one of the Philadelphia liquor stores where she worked, "actually, literally opened a bottle and drank it in the store." (H.T. at 57, R.R. at 88a.)
Regarding the use of sexually explicit language, the record supports the finding that Claimant used such language only when other employees were willing participants in conversations about their personal lives, out of sight and earshot of customers. Further, the Board resolved inconsistencies in the testimony in favor of Claimant. Claimant testified that she did not recall ever making comments of a sexual nature during the course of her employment beyond just general conversations with employees about their personal lives. (H.T. at 57, R.R. at 88a.) One Employer witness testified that employees, including Claimant, would gather before the store opened and discuss their personal lives, including relationships with spouses and boyfriends, and including graphic discussions about their sex lives:
Q: [W]as it common for the employees to talk about their personal lives -(H.T. at 23, R.R. at 54a; see also H.T. at 22-24, R.R. at 53a-55a.) That testimony was corroborated by another Employer witness, who confirmed that it was not unusual for employees, including Claimant, to congregate off the store floor, away from customers, and have explicit discussions concerning their sex lives. (H.T. at 43-44, R.R. at 74a-75a.) That witness's testimony also contradicted the version of facts that Employer asserts on appeal, testifying that Claimant made comments that included profanity, but "never [at] customers, but in the backroom, of course, again like maybe during shipment when we were trying to get things done, but, you know, to me it was always in a joking manner, it was nothing serious that I remember. Nothing in a serious nature." (H.T. at 45, R.R. at 76a.) This same witness testified that "She [Claimant] was a good manager, just tough. I mean as long as you did your work she was good with you." (H.T. at 43, R.R. at 74.)
A: Yeah.
Q: - problems with husbands, boyfriends, wives?
A: That's what they - that's what they - they came in and they talked about their problems more so at work than they did at home.
Q: Did other employees talk about their sex lives?
A: Yes.
Q: Did other employees use rough language like talk about "dick" and things like that?
A: They use it, I'm going to say, yeah - yeah they did, but it wasn't when customers was in the store, it wasn't - they weren't involved on the floor with it. . . .
When determining whether a claimant's language rises to the level of willful misconduct, we examine the language used in context. For example, in Bush v. Unemployment Compensation Board of Review, we refused to affirm the Board's denial of benefits based on the claimant's use of profanity on the job, because the Board failed to examine the context in which the profanity was used. 409 A.2d 523, 524 (Pa. Cmwlth. 1980) (holding that claimant's admission that he used profanity "at times" is insufficient to support legal conclusion of willful misconduct without "concrete evidence concerning the context in which the profanity was used"). See also Brandt v. Unemployment Compensation Board of Review, 537 Pa. 267, 272, 643 A.2d 78, 80 (1994) (analyzing context in which claimant used profane language at work); Woodson v. Unemployment Compensation Board of Review, 461 Pa. 439, 443, 336 A.2d 867, 868 (1975) ("Willful misconduct cannot therefore be considered in a vacuum. It must be considered in relation to the particular employees and to the reasonable standards expected by a particular employer."); Poplin v. Unemployment Compensation Board of Review, 690 A.2d 781, 784 (Pa. Cmwlth. 1997) (affirming grant of benefits after examining offensive comments in context and in light of referee's credibility findings); Allen, 638 A.2d at 451 (examining whether "language was unreasonable under the circumstances").
In Bush, we affirmed the denial of benefits on other grounds. 409 A.2d at 524.
Here, the Board found that Claimant credibly testified regarding her own conduct on the job, and that most of the testimony against her, on which Employer relies on appeal, was not credible. In finding Employer's witnesses largely not credible, the Board found that they were biased and offered testimony against Claimant only because Claimant had previously disciplined each of them as part of her managerial duties. (Referee's Decision and Order at 2-3.) After accounting for the Board's credibility determinations, Claimant's conduct can be boiled down to the use of profanity and sexual language only in conversations that other employees willingly participated in and that took place in the stock room, away from customers. The fact that Employer contends it presented a different version of the facts is not a basis for reversal. Tapco, Inc. v. Unemployment Compensation Board of Review, 650 A.2d 1106, 1108-09 (Pa. Cmwlth. 1994). Under the circumstances, we find that the Board's determination was not in error.
Employer's next two arguments are that substantial evidence does not support the findings that Employer never warned Claimant regarding her conduct and that Employer does not have policies against the use of sexual or profane language. We disagree. First, contrary to Employer's assertion, there is absolutely no evidence that Employer warned Claimant that she might be discharged for using profanity or sexual language in casual conversations. Nor does Employer cite any record evidence that would substantiate this claim.
Employer argues that Claimant was made aware of certain policies and that, therefore, "she was, in effect, warned." (Employer's Brief at 33.) General awareness of a work policy, especially a vague policy addressing "common decency and morality," is different than an employer providing a warning to a specific employee that specific conduct violates the policy.
Second, the Board's findings that no policies existed against sexual language and profanity are supported by substantial evidence. The record establishes that Employer has a policy against sexual harassment and a booklet entitled "Work Rules and Guide to Better Service," which list "discourtesy to customers or fellow employees" and "common decency and morality." There are no policies that provide a per se prohibition on sexual language or profanity.
Third, regarding the policies that do exist, Employer's burden does not stop at merely proving their existence. To prove willful misconduct in relation to a work policy, Employer must prove the existence of the policies, their reasonableness, that Claimant was aware of their existence, and that Claimant violated them. Walsh, 943 A.2d at 369; Williams, 926 A.2d at 571; Guthrie, 738 A.2d at 521. Here, the referee expressly noted during the hearing that Employer failed to produce the policies in effect when Claimant would have received them. (H.T. at 10, R.R. at 41a.) Employer also failed to establish that its policies were violated under the circumstances.
Employer introduced its current policies that were dated after Claimant's employment had begun and Employer's witness admitted that he did not know the precise language of the older policies that Claimant might have received. (H.T. at 10-11, R.R. at 41a-42a.)
Regarding Employer's sexual harassment policy, the policy defines sexual harassment as "unwelcome sexual advances, requests for sexual favors, and/or other verbal, visual, or physical conduct of a sexual nature . . . [where] such conduct has the purpose or effect of unreasonably interfering with an individual's work performance or creating an intimidating, hostile, or offensive work environment." (Employer's Brief at 7; H.T. Ex. E-2, R.R. at 95a-96a.) As explained above, the Board found that Claimant's conduct did not create a hostile work environment and that Employer's witnesses were not offended by Claimant's behavior and, in fact, freely participated in sexually explicit conversations. Those findings are supported by substantial evidence and are not erroneous. Notwithstanding Employer's argument, the sexual harassment policy does not provide a blanket prohibition on the use of all sexual language or profanity in the workplace.
Employer's "Work Rules and Guide to Better Service" provides that "discourtesy to customers or fellow employees" and "common decency and morality" will lead to "disciplinary action such as oral warning, written warning, levels of discipline, or discharge, depending on the seriousness of the offense, and the past record of the employee." (R.R. at 106a.) Under the circumstances here, Employer failed to establish a violation of this policy. There is no evidence that Employer's "Work Rules and Guide to Better Service" are intended to ban all curse words from the workplace or that Employer provided Claimant with warnings or training to explain the type of conduct this policy covered. Accordingly, we conclude that the Board's findings regarding Employer's work policies are supported by substantial evidence.
Employer's "Work Rules and Guide to Better Service" contains a second list of offenses that may be "just cause for immediate discharge." (R.R. at 107a.) Employer has not alleged that Claimant violated any of these offenses.
Employer next argues that the Board capriciously disregarded evidence of Employer's policies regarding sexual harassment, discourtesy to customers or fellow employees, and common decency and morality. The capricious disregard of evidence is the deliberate disregard of competent evidence that one of ordinary intelligence could not possibly have avoided in reaching a result. Leon E. Wintermyer, Inc. v. Workers' Compensation Appeal Board (Marlowe), 571 Pa. 189, 203-04 & n.12, 812 A.2d 478, 487-88 (2002) (holding that even in a "close case," capricious disregard standard of review "is not to be applied in such a manner as would intrude upon the agency's fact-finding role and discretionary decision-making authority"). The Board's findings are supported by substantial evidence and its opinion is well-reasoned. As a result, the Board did not capriciously disregard evidence of Employer's policies. Moreover, and in any event, as discussed above, Employer failed to meet its burden of establishing that its policies were violated.
Finally, Employer argues that substantial evidence does not support the Board's findings that Employer tolerated Claimant's behavior or that Claimant reasonably believed her conduct was condoned and would not lead to discipline. More specifically, Employer argues that there was no evidence that its upper management was aware that Claimant was making comments of a sexual nature and using profanity towards subordinate employees until it received a complaint in December 2010. Therefore, Employer argues, because it was unaware of Claimant's inappropriate behavior prior to the investigation, and it terminated her employment as soon as it learned of this behavior, it could not logically have tolerated or condoned such behavior and the Board's findings to the contrary are not supported by the evidence of record. This argument also fails.
When an employer establishes that the claimant has committed willful misconduct or violated a work policy, the burden shifts to the claimant to show good cause for her conduct. Guthrie, 738 A.2d at 522. Because we affirm the Board's holding that Employer failed to meet its burden, the findings that Employer tolerated or condoned Claimant's conduct, which would constitute good cause, are not necessary or material to the ultimate outcome of this case. Frazier v. Unemployment Compensation Board of Review, 833 A.2d 1181, 1183 n.4 (Pa. Cmwlth. 2003) (en banc) (requiring that "necessary" facts be supported by substantial evidence). The necessary finding, discussed above, is that Employer failed to meet its burden.
Nevertheless, even if Employer had met its burden, the Board's findings establish that Claimant would have proven good cause for her actions because she reasonably believed Employer condoned her conduct. At least one of Claimant's subordinates filed complaints about her with upper management, independent of and prior to the December 2010 investigation that led to her discharge. (H.T. at 19, R.R. at 50a.) There is also evidence that Claimant worked with district managers who witnessed Claimant's behavior. (H.T. at 29, R.R. at 60a.) Yet, over a period of time, Employer repeatedly assigned Claimant as the "clean-up" woman for "problem" stores that Employer expected her to fix, which she did in a managerial style that she described at the hearing. (Referee's Decision and Order at 2-3; H.T. at 49, R.R. at 80a.) Claimant's testimony indicates that the stores Employer assigned to her were in disarray and their employees were not doing their jobs properly and were resistant to taking direction. In addition, Employer had never before investigated or reprimanded Claimant, despite the fact that at least one of Claimant's subordinates had filed a complaint about her. Finally, Employer failed to prove that its work rules prohibited the type of conduct that the Board found actually occurred, which could have provided Claimant with advance notice that Employer disapproved of her conduct. Based on those facts, the Board made a reasonable inference that Employer tacitly tolerated, if not condoned, Claimant's conduct and that Claimant reasonably believed her managerial style and conduct would not lead to her discharge. Our holding today certainly does not condone the use of profanity or sexually explicit language in the work place. However, given the facts of this case, we find no error in the Board's decision.
Claimant described her role as follows: "[Employer] sent me to stores that was [sic] either messed up in inventory or just unclean and out of order. The other managers wasn't [sic] able to get them together." (H.T. at 49, R.R. at 80a.) Claimant testified that her function was to "[c]lean it up, straighten it out, fix the inventory, get things, you know, functioning in an orderly fashion." (Id.) Employer sent her to five such stores in 2010. (Id.; F.F. ¶4.) Claimant continued: "[A]nytime you walk into a new store somebody's going to always feel, 'Well, what is she doing here, is she challenging my authority[?] . . .' I just took over in the sense of having a system and straighten up. But first I observe what's going on and then I try to address it. Had meetings, you know, had open discussions and I asked for their input as well . . . so at least they understood where I was coming from and what was needed to be done in the store." (H.T. at 49-50, R.R. at 80a-81a.) Claimant described her managerial style as "take no hostages. . . . I don't babysit people. I get them to do their job. 'This is what I need you to do, let's do it,' you know, excuses is [sic] really not one of my things that I accept . . . just get the job done." (H.T. at 50, R.R. at 81a.) --------
/s/_________
JAMES GARDNER COLINS, Senior Judge Judge Leadbetter dissents. Judge Cohn Jubelirer did not participate in the decision in this matter. ORDER
AND NOW, this 14th day of September 2012, the order of the Unemployment Compensation Board of Review, B-520106, in the above-captioned matter is hereby AFFIRMED.
/s/_________
JAMES GARDNER COLINS, Senior Judge