Opinion
No. 106,820.
2012-09-21
Steven J. SLOBODZIAN, Appellee, v. KANSAS EMPLOYMENT SECURITY BOARD OF REVIEW, Appellant, and Pepsi–Cola General Bottlers TALX UC Express, Appellee.
Appeal from Johnson District Court, Kevin P. Moriarty, Judge. Justin L. McFarland, of Kansas Department Labor, of Topeka, for appellant. Eliehue Brunson, of The Brunson Law Firm, of Topeka, for appellee Steven J. Slobodzian.
Appeal from Johnson District Court, Kevin P. Moriarty, Judge.
Justin L. McFarland, of Kansas Department Labor, of Topeka, for appellant. Eliehue Brunson, of The Brunson Law Firm, of Topeka, for appellee Steven J. Slobodzian.
Before McANANY, P.J., HILL, J., and BUKATY, S.J.
MEMORANDUM OPINION
PER CURIAM.
This appeal arises from Steven Slobodzian's claim for unemployment benefits after he left his employment at Pepsi–Cola General Bottlers (Pepsi) following almost 40 years of service. Slobodzian's claim was denied by the Kansas Department of Labor's unemployment insurance judge because work was still available when Slobodzian quit and he voluntarily left work without good cause attributable to the work or to the employer. That decision was affirmed by Kansas Employment Security Board of Review (Board). Slobodzian sought judicial review in the district court. The district court reversed the Board, and the Board appeals.
When Slobodzian applied for unemployment benefits he completed a required Claimant Separation Statement form on November 1, 2010. Slobodzian set forth the events later described in his testimony and stated, “I felt if I did not accept this [severance] package I would be terminated.”
On November 22, 2010, someone at the Employment Security Division contacted Slobodzian by phone and reported that Slobodzian made the following addition to his original statement:
“The employer did not say that I would for sure be fired if I did not take the severance package. I had not received any prior verbal or written warnings in regards to the employer having any issues with my job performance. There was no other location that I would have been able to transfer to in the area.”
The evidentiary administrative hearing on Slobodzian's claim was conducted on January 3, 2011, over the telephone. Pepsi chose not to participate. Slobodzian was the only witness. He testified under oath as follows:
“In the last two years that I worked for Pepsi I was demoted twice. According to the region manager, Todd Roberts, it was not due to performance, but due to company direction. When I asked him what that meant he just shrugged his shoulders. In the last year I was not given a raise. My bonus went from 15% of base pay, paid quarterly, to 12% base pay, paid yearly. My work week in this time frame went from Monday through Friday to Wednesday through Sunday, which included working holiday, which 1 used to have all off. In addition to all this in my last year my vacation time was reduced by two days per week of vacation. So, when I worked Monday through Friday I also received the weekend before and after off, totaling nine days per week of vacation. This changed to vacation days during a Sunday work week and the five days worked, plus my regular two days off, totaling seven days of vacation. So, I endured all these changes. I was given a below satisfactory rating on my yearly review for 2009. And that was given to me in February 2010, written and personally communicated to me by my immediate supervisor, James Elliott. On this date and two other dates, one in late 2009 and the other in March 2010, I was asked by two different managers if I would accept a severance package if offered. First two were by my immediate supervisor, James Elliott. To him I responded I would have to wait to see what it entailed. The third time was offered by the region manager, Todd Roberts, and he also stated that if I were to be terminated the severance package would not be offered. At that point I figured I was targeted to leave the company one way or the other. With all this information I felt I had no other alternative but to accept the severance package or be terminated. I thought that with my experience I could get a job, but that has been elusive. My personal plans were to retire in four years at age 62. There is no way I would have left the company if not coerced. In addition to that in my 18 years at Olathe Pepsi I did not know of any supervisor or manager who has voluntarily retired. Union people, yes. Managers, no. So, that's basically why I accepted the severance package.”
Slobodzian was asked why he received a below satisfactory performance rating. He testified that in the employee program that involved acknowledging people for doing a good job, he had done 20 during the year but was only given credit for 10. He was also down-rated based on his retention rate for female employees. Slobodzian testified, “I said, Jim, I don't have any female employees. And I don't do the hiring, so how can you rate me unsatisfactory there? [His supervisor answered,] Well, it's just part of the thing.”
The unemployment insurance judge ruled that Slobodzian was disqualified for benefits. Slobodzian then retained counsel and pursued an administrative appeal. After an unsuccessful appeal to the Board, Slobodzian filed his Petition for Judicial Review of Agency Action in the district court. Pepsi was named a party to the proceedings but did not appear and participate.
At the June 29, 2011, hearing in the district court on Slobodzian's petition, the Board's counsel argued that the denial of benefits was supported by Slobodzian's statement in the Claimant's Separation Statement that “Region manager Todd Roberts told me that either I take the separation package, or that my further employment was in question.” The Board's counsel also referred to Slobodzian's testimony at the hearing, from which counsel concluded, “It's not a termination, it's a voluntary quit resignation. It's not a termination. The employer never said, You will be terminated. It said, If you are terminated, you won't receive this [severance package].” Regarding Slobodzian's statement that he felt he would be terminated if he did not accept the severance package, the Board's counsel argued:
“An employee can have subjective feelings all day long about what their future is going to be like.... There was no evidence put forth by the claimant that his job was in jeopardy, was going to end on a certain date. He didn't offer any statements that his job would be terminated. He may have felt that way but there was nothing in the record to support those feelings.”
Slobodzian's counsel countered that a “gun was at his head” and Slobodzian believed he would be terminated if he did not resign. “Slobodzian was basically constructively discharged and he chose to take what was offered because he knew he was going to be fired.” Further, there was no evidence that work was still available to Slobodzian when he quit.
The district court announced its ruling from the bench in favor of Slobodzian, noting that Slobodzian had been demoted twice in 2 years, his work schedule was changed, and his salary and his bonus were reduced. He was told that his demotions and reduction in salary were not due to anything other than the situation within the company. He was twice asked by managers if he would take a severance package. When those requests failed, the region manager confronted him with the same proposal. The court concluded, “I think that everybody with a lick of common sense would believe that they were about to be pushed out the door, one way or another way, just as he was. And in this environment, it is better to get something than nothing.”
The court determined that the record did not support the Board's finding that Slobodzian's termination was voluntary. The district court determined Slobodzian “was forced into constructive termination and that the findings of the agency, based upon their own facts that they have and viewed in light of all of the entire record, it was unreasonable for the agency to find as they did. And I find it was arbitrary as well.”
This brings us to the central issue of this appeal: whether there is substantial competent evidence to support the Board's finding that Slobodzian left his job voluntarily without good cause attributable to Slobodzian's work or to Pepsi, his employer.
We review the district court's decision under the provisions of the Kansas Judicial Review Act (KJRA), K.S.A. 77–601 et seq. Under the KJRA, the “burden of proving the invalidity of agency action is on the party asserting invalidity.” K.S.A.2011 Supp. 77–621(a)(1). The KJRA states that a court reviewing an agency's action should overturn the action only if it determines at least one of the following:
“(1) The agency action, or the statute or rule and regulation on which the agency action is based, is unconstitutional on its face or as applied;
“(2) the agency has acted beyond the jurisdiction conferred by any provision of law;
“(3) the agency has not decided an issue requiring resolution;
“(4) the agency has erroneously interpreted or applied the law;
“(5) the agency has engaged in an unlawful procedure or has failed to follow prescribed procedure;
“(6) the persons taking the agency action were improperly constituted as a decision-making body or subject to disqualification;
“(7) the agency action is based on a determination of fact, made or implied by the agency, that is not supported to the appropriate standard or proof by evidence that is substantial when viewed in light of the record as a whole, which includes the agency record for judicial review, supplemented by any additional evidence received by the court under this act; or
“(8) the agency action is otherwise unreasonable, arbitrary or capricious.” K.S.A.2011 Supp. 77–621(c).
In reviewing the record, we do not reweigh evidence or engage in de novo review. K.S.A.2011 Supp. 77–621(d). Substantial evidence is “such legal and relevant evidence as a reasonable person might accept as being sufficient to support a conclusion.” State v. Walker, 283 Kan. 587, Syl. ¶ 2, 153 P.3d 1257 (2007). Of particular significance is the fact that in considering whether the agency's action is supported by substantial evidence, the court is not to view any one piece of evidence in isolation but shall examine the question “in light of the record as a whole.” K.S.A.2011 Supp. 77–621(c)(7).
The Kansas Legislature established the Employment Security Law, K .S.A. 44–701 et seq. , to provide benefits to workers who are involuntarily unemployed. K.S.A. 44–702. One of its provisions states that an individual shall be disqualified from receiving unemployment benefits if he or she “left work voluntarily without good cause attributable to the work or the employer.” K.S.A.2011 Supp. 44–706(a).
The law applicable to these particular facts appears to be rather undeveloped in Kansas. We find our Supreme Court's decision in Zimmerman v. Board of Review of the Employment Security Division, 208 Kan. 68, 490 P.2d 359 (1971), but the resignation of the employee there was so lacking in provocation that the case gives us little guidance. Similarly, Palmer News, Inc. v. Kansas Employment Security Bd. of Review, 24 Kan.App.2d 655, 951 P.2d 546 (1997), is not helpful. There, the employee told the employer on June 21 he intended to quit on August 31, and the employer terminated the employee on July 26 but paid him through August 31, the date he said he was resigning.
The caselaw in Kansas discussing constructive termination deals largely with situations when the employee quits in order to escape a hostile work environment. See, e.g., Garvey Elevators, Inc. v. Kansas Human Rights Comm'n, 265 Kan. 484, 494, 961 P.2d 696 (1998). Here, there is no accusation of hostility. With no on-point caselaw in Kansas, the parties turned to cases from other jurisdictions.
The Board's Cases
The Board relies on Erb v. Commissioner of Economic Sec., 601 N.W.2d 716, 717, 719 (Minn.App.1999), and Ganter v. Unemployment Comp. Bd. of Rev., 723 A.2d 272 (Pa.Commw.1999). Erb (Minnesota)
Erb owned and operated her own business. Because of mounting expenses she was advised to sell her business to avoid bankruptcy. She terminated her own employment from the company and a few days later sold the business to the new owner, who retained all the business' existing employees. When Erb applied for and received unemployment benefits the new owner protested, and the Minnesota Department of Economic Security withdrew Erb's benefits.
Minnesota had a statute, Minn. Stat § 268.09 subd. la (1997 Supp.), which specifically provided: “A claimant who quits employment shall be disqualified from benefits.” Minnesota also statutorily defined the term “quit” as “when the decision to end the employment was, at the time the employment ended, the employee's .” Minn.Stat. § 268.08, subd. 2a. (1997 Supp.). Under Kansas law, “[a]n individual shall be disqualified for benefits: (a) If the individual left work voluntarily without good cause attributable to the work or the employer.” 2011 Supp. K.SA. 44–706.
The Minnesota Court of Appeals held that a claimant was not entitled to unemployment benefits under these circumstances. “[I]t is undeniable and uncontested that [Erb] was in complete control of her employment circumstances. Hence section 268.09 clearly applies. To hold otherwise would be to ignore the legislative mandate.” 601 N.W.2d at 719.
We have no such legislative mandate in Kansas. Our only legislative mandate in Kansas is to deny benefits to a former employee who “left work voluntarily without good cause attributable to the work or the employer.” K.S.A.2011 Supp. 44–706(a). Slobodzian was certainly not in the position of Erb, who owned her own company and “was in complete control of her employment circumstances.” 601 N.W.2d at 719. Slobodzian, a middle-aged middle manager who worked for the same company for 40 years, 18 years at the same Olathe facility, and was 4 years away from retirement, was not in control of his employment circumstances. The terms and conditions of his employment were dictated by his employer. They were repeatedly changed in ways adverse to Slobodzian in the 2 years preceding his departure. We do not find Erb to be particularly compelling. Ganter (Pennsylvania)
Ganter comes from Pennsylvania. Pennsylvania has a legislative framework somewhat different from that in Kansas. Under Pennsylvania law, a claimant is ineligible for benefits when unemployment “is due to voluntarily leaving work without cause of a necessitous and compelling nature.” 43 Pa. Cons.Stat. § 802(b) (2009).
In Ganter, the claimant was a single mother who worked as a visiting hospice nurse. When she refused to accept an assignment because of childcare problems, she was suspended for 3 days without pay and told she would be terminated if she refused another assignment. Several days later she tendered her resignation because “she felt she would not be able to meet Employer's expectations, which would ultimately result in her discharge.” 723 A.2d at 273.
As 43 Pa. Cons.Stat. § 802(b) indicates, Pennsylvania allows a claimant who quits a job to receive unemployment benefits if the claimant establishes necessary and compelling reasons for the voluntary termination. The court found that Ganter's childcare circumstances established a necessary and compelling reason for her to quit her job.
The employer argued that Ganter did not have “necessitous and compelling” reasons to quit because there was no evidence she faced imminent discharge. 723 A.2d at 275. In disposing of this argument the court observed: “We recognize that quitting work due to the possibility of discharge does not constitute necessitous and compelling reasons for voluntary termination....” (Emphasis added.) 723 A.2d at 275. The court refocused the analysis on Ganter's childcare situation.
Ganter would seem to favor Slobodzian. Ganter received unemployment benefits notwithstanding the fact that she tendered her resignation when it was apparent to her that she could be terminated sometime in the future if she could not make suitable childcare arrangements before a future job assignment.
The Board relies on the language the court used in Ganter when it contends that the mere possibility of Slobodzian being fired does not make his termination involuntary. In Ganter the fate of the employee was in her own hands; if she got out and made suitable daycare arrangements, she would have no problem continuing her employment. This stands in contrast with Slobodzian's circumstances. It was apparent to him that the demotions without cause, the reduced pay, the shifting of work schedule so as to eliminate weekends off, and the covert pressure from management to get him to resign were designed to force his resignation. He contends that when he tendered his resignation his termination was an inevitability rather than a mere possibility. The question for us is whether the record as a whole supports the Board's contrary finding.
But returning to the Ganter court's language relied upon here by the Board, in addressing this issue, the Ganter court relied on Charles v. Un. Comp. Bd. of Rev., 122 Pa. Commw. 439, 552 A.2d 727 (1989). In Charles, the employer had a policy that an employee absent more than 3 days without a medical excuse would be terminated. Charles' car was in need of repair, and he wanted to take off work in order to repair it. Charles asked his employer to lay him off, apparently in an effort to get unemployment compensation during the time he planned on being off work repairing his car. The employer refused. Charles' car became inoperable, and on his third day absent he called his employer and said he was quitting.
Charles applied for benefits. The court ultimately found that he was ineligible because he voluntarily quit without “cause of a necessitous and compelling nature.” 122 Pa. Commw. at 444. The court stated: “Where an employee, without action by the employer, leaves or quits work, the employee's action is considered voluntary under the law. (Citation omitted.)” 122 Pa. Commw. at 442. The court observed: “Petitioner would have us find that he quit for cause of a necessitous and compelling nature simply because his car broke down and he needed time to repair it.” 122 Pa. Commw. at 443.
In Charles, the employer did nothing to cause the circumstances that led to the employee quitting. The court in Charles noted the distinction found in J.C. Penney Co., Inc. v.. Un. Comp. Bd. of Rev., 72 Pa. Commw. 445, 457 A.2d 161 (1983). In that case the employer moved its office to a distant location. The Charles court noted: “We affirmed the Board's award of benefits in J.C. Penney, finding that the additional commuting distance and unreimbursed expenses associated with the travel were excessive and thus caused a necessitous and compelling nature for voluntarily terminating employment.” 122 Pa. Commw. at 444.
We do not find Ganter and Charles to be helpful. Those cases involved situations in which the employer played absolutely no role in bringing about the circumstances that led to the employee resignations. That was clearly not the situation Slobodzian faced. The record discloses that Slobodzian's conduct played absolutely no role in his demotions, pay cuts, and subpar performance review.
Slobodzian's Cases
Slobodzian relies primarily on four cases: Southern Bell T. & T. Co. v. Administrator, Div. of E.S., 200 So.2d 761 (La.App.1967); Anchor Motor Fr., Inc. v. Unemployment Ins. Ap. Bd. Del., 325 A.2d 374 (Del.Super.1974); Thomas v. Dist. of Col. Dept. of Labor, 409 A.2d 164 (D.C.1979); and LeDew v. Unemployment Appeals Com'n, 456 So.2d 1219 (Fla.Dist.App.1984). Southern Bell (Louisiana)
Under Louisiana law a claimant is disqualified from receiving unemployment benefits if “ ‘he has left his employment without good cause connected with his employment.’ “ Southern Bell, 200 So.2d at 763. In Southern Bell the claimant, a telephone operator who returned to work after an illness, was confronted by her supervisor who presented her with a proposed letter of resignation and an offer for severance pay if she signed the letter.
The Louisiana Court of Appeals found that, although the claimant signed the resignation letter and thus quit, she qualified for unemployment benefits.
“In this situation the company's tender to the employee of the letter of resignation is a clear indication that the employer no longer desired the services of the employee and, though perhaps eager to avoid the appearance of having fired the employee, is nevertheless strongly inclined to remove from the ranks of its employees the one to whom the letter of resignation is tendered.” 200 So.2d at 763.
Anchor (Delaware)
In Anchor, the court found that a claimant established she had good cause to leave her job when her supervisor, who was also her brother, presented her with a letter of resignation and told her that if she did not sign it she would be fired and would not receive her last paycheck or vacation check. 325 A.2d at 375. Under these facts the Delaware court determined that the claimant's resignation was involuntary. The court defined “ ‘voluntary’ “ as “ ‘proceeding from one's own choice or full consent.’ “ 325 A.2d at 376. (Of similar ilk, see Reynolds v. Employment Dept., 259 P.3d 50 [Or.App.2011].)
We have no such overt presentation to Slobodzian of an offer he could not refuse as found in Southern Bell Telephone and in Anchor. But our review does not focus on one “smoking gun” event, but rather on all the events in the record leading up to Slobodzian's termination. See K.S.A.2011 Supp. 77–621(c)(7). Thomas (District of Columbia)
In Thomas, the claimant was confronted by her supervisor and told that “(1) based on her latest slip-up and her generally spotty prior performance record she could be removed, (2) she should contact her union representative, and (3) she might consider the alternative of resigning in return for the hospital's destroying any record of her poor performance.” 409 A.2d at 167. Her union representative suggested that she should accept the supervisor's offer and resign because there was a proposal to remove her “and the personnel department intended to achieve that result.” 409 A.2d at 167. Thomas resigned but testified that “the ‘real reason’ she resigned was ‘because [she] was afraid [she] was going to get fired from the government.’ “ 409 A.2d at 168. The Board found that Thomas had voluntarily resigned and it denied her benefits.
On appeal the District of Columbia Court of Appeals reversed and found that Thomas' resignation was not voluntary. The court noted that in considering the voluntariness issue in light of the imminence of a feared discharge, courts uniformly find the resignation to have been voluntary “where the employer has offered solid evidence that what was communicated was merely a warning, and not an imminent firing .... a reasonable worker in that position should remain on the job (as the employer anticipates he would) and try to improve his performance. (Citations omitted.)” 409 A.2d at 173. In view of the applicable law's presumption of involuntariness, the court concluded that “the only evidence in the record tends to support—not rebut—the applicable presumption of involuntariness. The employer did not appear at the hearing to introduce any contrary evidence....” 409 A.2d at 173.
We do not find any comparable presumption of involuntariness in our Kansas law. Nevertheless, the agency was required to liberally apply the law in considering a claim for benefits. See Goodyear Tire & Rubber Co. v. Employment Security Board of Review, 205 Kan. 279, 283, 469 P.2d 263 (1970).
Unlike the example of voluntariness noted in Thomas where the employer merely advises the employee to shape up, which would motivate a reasonable worker to stay on the job and improve his or her performance, there was no identified deficiency in Slobodzian's job performance he could correct. LeDew (Florida)
In LeDew, the claimant, a school district employee, complained to the state attorney's office about the school superintendent's official misconduct. The superintendent confronted the claimant and demanded his resignation on the grounds of gross insubordination. The claimant complied. He was denied unemployment benefits because his resignation was deemed voluntary because he had the right to challenge the superintendent's resignation demand before the school board but failed to do so. On appeal, the court found that seeking relief from the school board, which routinely sided with the superintendent, would have been a futility.
The court declared that under Florida law, “ ‘[t]o voluntarily leave employment for good cause, the cause must be one which would reasonably impel the average able-bodied qualified worker to give up his or her employment.’ [Citation omitted.]” 456 So.2d at 1223.
The facts surrounding Slobodzian's termination are not as clear cut as those in Southern Bell, Anchor, and LeDew. The employers in these cases exhibited a degree of bluntness and clarity that made the employer's intentions and the employee's options clear and unequivocal. Pepsi's intentions and Slobodzian's options, on the other hand, require closer examination. Nevertheless, the issue before us is the same: whether Slobodzian's termination was voluntary or whether the situation was as he put it at the telephone hearing: “At that point I figured I was targeted to leave the company one way or the other. With all this information I felt I had no other alternative but to accept the severance package or be terminated.”
It is time to return to our own law. Kansas law prohibits an employee from receiving unemployment insurance benefits if he or she “left work voluntarily without good cause attributable to the work or the employer.” K.S.A.2011 Supp. 44706(a). The Board determined that Slobodzian “left work anticipating a dismissal in the near future. Work was still available when the claimant quit. Therefore, the claimant should be disqualified from receiving benefits.” We find no provision in our statutes regarding “work remaining available.” The issue is whether Slobodzian's resignation was voluntary and without good cause attributable to Pepsi.
As noted earlier, in determining whether a claimant is entitled to benefits, the claimant is entitled to a liberal interpretation of the act. Goodyear Tire & Rubber Co., 205 Kan. at 283. Like here, the issue in Goodyear was whether the employee was voluntarily unemployed.
While Slobodzian made a prehearing supplemental statement indicating that “[t]he employer did not say that I would for sure be fired if I did not take the severance package.” He had previously stated, “I felt if I did not accept this [severance] package I would be terminated.” Further, at the hearing on his claim, Slobodzian testified, “I figured I was targeted to leave the company one way or the other. With all this information, I felt I had no other alternative but to accept the severance package or be terminated.” The Board's counsel argued before the district court that “[h]e may have felt that way but there was nothing in the record to support those feelings.”
Slobodzian provided the only facts regarding his employment and termination. Pepsi did not respond to his claim or participate in any way. Slobodzian was the only witness at the hearing. When he left he was 4 months shy of his 40th anniversary working for Pepsi. He had worked the last 18 years at the Olathe facility. He was the merchandise supervisor for Pepsi and planned to retire in 4 years. The history at Pepsi was that while union employees may voluntarily retire, managers did not.
During the 2 years preceding his termination, Slobodzian was demoted twice, his bonus pay was reduced, his vacation time was reduced, and he was denied a pay raise. His work schedule changed so his days off were Monday and Tuesday, rather than the former Saturday and Sunday. According to his regional manager, his two demotions were unrelated to his job performance,
Timing is everything. In late 2009 Slobodzian's immediate supervisor asked him if he would accept a severance package. When he declined, he received a pretextual below-satisfactory annual review rating in February 2010. In setting Slobodzian's review rating, his supervisor criticized him for only having 10 rated incidents when, in fact, he had 20. He was criticized for his retention rate for female employees even though he did not have any female employees and was not involved in the hiring process.
The following month, March 2010, another manager asked Slobodzian if he would be willing to quit and take a severance package. When he again declined Pepsi brought in the big gun, the region manager, to press the issue. The region manager told Slobodzian that if he were to be terminated, the severance package would no longer be available. Seeing the handwriting on the wall, Slobodzian accepted the offer and quit.
As Judge Moriarty stated in setting aside the Board's decision, “I think that everybody with a lick of common sense would believe that they were about to be pushed out the door, one way or another way, just as he was. And in this environment, it is better to get something than nothing.” We agree with Judge Moriarty's analysis. In order to stand, the Board's decision must be based on substantial evidence. As noted earlier, substantial evidence is “such legal and relevant evidence as a reasonable person might accept as being sufficient to support a conclusion.” State v. Walker, 283 Kan. 587, Syl. ¶ 2, 153 P.3d 1257 (2007). Slobodzian's uncontradicted testimony was that “[t]here is no way I would have left the company if not coerced.” We find no contrary evidence that a reasonable person would accept. The district court did not err in setting aside the Board's decision denying unemployment benefits.
As a corollary, the Board argues that the district court erred in finding the Board's decision to be arbitrary, capricious, or otherwise unreasonable. In view of our findings above, this issue is now moot. Pursuant to K.S.A.2011 Supp. 77–621(c), the reviewing court need only find one of the stated grounds in order to overturn the agency action. We find that ground 77–621(c)(7) applies: the lack of substantial evidence, when reviewing the record as a whole, to support the Board's action.
Affirmed.